Method Deck / finance
Break-even units
Computes the number of units a business must sell to cover fixed costs, given the unit price and unit variable cost.
Published for review. The Founder is checking every card himself; anything he strikes comes down the same hour.
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Inputs
- fixed_cost (number, currency units, required) min 0 : Total fixed costs for the period
- unit_price (number, currency units, required) min 0 : Selling price per unit
- unit_variable_cost (number, currency units, required) min 0 : Variable cost per unit
Outputs
- break_even_units (units): Units needed to break even, rounded up to the next whole unit
- contribution_margin (currency units): Unit price minus unit variable cost
Steps
- contribution_margin = unit_price - unit_variable_cost; this must be greater than 0 or break-even is impossible.
- break_even_units (exact) = fixed_cost / contribution_margin.
- Round break_even_units up to the next whole unit (a business cannot sell a fraction of a unit).
- Round contribution_margin to 2 decimals (money to cents).
Constants
None.
Sources
- Principles of Corporate Finance (McGraw-Hill, 2026-09-30T19:31:29Z) - Break-even units = Fixed costs / (Price - Variable cost per unit)
Worked example and test vectors
| Name | Inputs | Answer |
|---|
| worked example | {"fixed_cost":50000,"unit_price":25,"unit_variable_cost":15} | 5,000 units |
| test vector: non-integer result rounds up | {"fixed_cost":10000,"unit_price":12,"unit_variable_cost":9} | 3,334 units |
Published card
- Address:
60f82735ae8e6a8a44e4b6befb863123
- Made at:
2026-09-30T22:39:30.722Z
- Method sha256:
203a0c6fc7c57ed6724edd9ed9b6eb672b3387e9890af7b4088ea5d87e466ecc