- 1). Determine the fixed costs of the company using the company's financial records. Fixed costs include all those costs that do not change according to sales: for example, rent, worker salaries and maintenance. Add all of the fixed costs together and note the amount.
- 2). Calculate the unit contribution margin. This is the selling price of a unit minus the variable costs of the unit. The variable costs are those that directly relate to the production of the unit, so they change with the number of units manufactured. Raw materials or unit packaging are examples of variable costs.
- 3). Divide the fixed costs for a month by the unit contribution margin to calculate the financial break-even point. For a company with fixed costs of $100,000 and a per unit contribution margin of $100, the financial break-even point is 1,000 units. To meet its financial obligations, the company will need to produce and sell 1,000 units.
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