Break-Even Analysis and Profit Planning Tool
Use price, fixed and variable costs to find the break-even point, the sales needed for a profit target, the margin of safety and operating leverage. Compare how price, cost and sales scenarios affect profitability.
Find the break-even point, the sales needed for a profit target, the margin of safety and operating leverage — then stress price, cost and volume.
Results
Notes on break-even and CVP analysis
What is break-even analysis?
Break-even analysis finds the sales level at which total revenue equals total cost and operating profit is zero. It is the core identity of cost–volume–profit (CVP) analysis.
What is contribution margin per unit?
Contribution margin per unit is selling price minus variable cost per unit. It is the amount left to cover fixed costs and then to create profit.
How is the contribution-margin ratio calculated?
CMR = (P − V) / P. It is the fraction of each sales lira remaining after variable costs.
How is break-even volume calculated?
BEQ = Fixed costs / contribution margin per unit. Equivalently, BER = Fixed costs / CMR.
How is the sales volume for a profit target calculated?
Required units = (Fixed costs + target profit) / CMu. If the target is after tax, first convert it to pretax profit: TP_pre = TP_after / (1 − t).
What is the margin of safety?
The margin of safety is expected (or actual) sales minus break-even sales. The ratio expresses that buffer as a percentage of expected sales.
What is the degree of operating leverage?
DOL = total contribution / EBIT. It approximates how a 1% change in sales volume, other things equal, scales the percentage change in operating profit near the current volume.
How does multi-product break-even analysis work?
A constant sales mix is used to form a weighted-average contribution margin. Composite break-even units = fixed costs / WACM, then allocated back to products by mix.
What is cash break-even?
Cash break-even excludes non-cash fixed costs such as depreciation. It shows the sales needed to cover cash fixed costs, not accounting profit of zero.
CVP assumptions
- Selling price per unit is constant over the relevant range.
- Variable cost per unit is constant over the relevant range.
- Total fixed costs are constant over the relevant range.
- Production and sales volume differences are ignored or treated separately.
- In multi-product analysis the sales mix is held constant.
- Costs can be separated meaningfully into fixed and variable components.
Note: This calculator is for financial education and decision support. Results depend on the assumptions you enter and on the CVP simplifications listed above; they do not replace a full budget, forecast or statutory report.