# Break Even Calculator

## What is Break Even Calculator?

A break-even calculator is a tool that helps businesses determine the point at which their revenues equal their expenses. This point is called the "break-even point," and it is an important metric for businesses to understand because it helps them determine how many units they need to sell to cover their costs.

How to Calculate Break Even Point?
The formula for calculating the break-even point is:

Break Even Point = Fixed Costs / (Unit Selling Price - Variable Costs)

## The Break Even Formula is used to calculate the number of units that must be sold to break even. The formula is as follows:

Break Even Point (BEP) = Fixed Costs / (Price – Variable Costs)

Where:

Fixed Costs = Total costs that do not change with the number of units produced.

Price = The price of the product or service.

Variable Costs = The cost of producing each unit of product or service.

Where:

Fixed Costs: these are the costs that do not vary with the level of production, such as rent, salaries, and insurance.
Unit Selling Price: this is the price at which each unit is sold.
Variable Costs: these are the costs that vary with the level of production, such as raw materials and labor.

### Example:

Let's say a company has fixed costs of \$10,000 per month and variable costs of \$5 per unit. They sell their product for \$20 per unit.

To calculate the break-even point, we would use the formula:

Break Even Point = \$10,000 / (\$20 - \$5) = 714.29 units

This means that the company needs to sell 714.29 units to cover its costs and break even.