Break-Even Quantity Formula
A reality check for the convergence of price, cost, and quantity — and whether management can envision how these parameters sync. Can sales commit to these numbers within a given budget and timeframe?
The formula
Q = FC / (R − VC)
The number of units a single-product company must sell to start turning a profit.
What goes into it
- Fixed costs (FC)
- Price per unit (R)
- Variable cost per unit (VC)
Worked example
| Fixed costs (FC) | $25,000 |
| Price / unit (R) | $100 |
| Variable cost / unit (VC) | $40 |
| Break-even (Q) | ≈ 417 units |