Financial
Break-even units and contribution margin: solve for zero-loss and target profit volume
Calculate unit contribution margin, whole break-even units with ROUNDUP, and required volume for a target operating profit.
Contribution margin pays down fixed overhead first
Every unit sold contributes Selling Price - Variable Cost per Unit toward covering Fixed Costs. Break-even volume is Fixed Costs / (Price - Variable Cost), rounded UP to the next whole unit with ROUNDUP(..., 0) when physical units cannot be sold fractionally.
Adding Target Profit to Fixed Costs—ROUNDUP((Fixed + TargetProfit) / (Price - VarCost), 0)—gives the exact sales volume needed to hit an earnings goal.
The model assumes constant selling price and variable cost, positive contribution margin, fixed costs above zero and that every unit produced is sold. Capacity limits, price changes and stepped costs can invalidate the simple linear result.
| CostDriver (A) | Value (B) |
|---|---|
| Monthly Fixed Costs | 18000 |
| Unit Selling Price | 45 |
| Unit Variable Cost | 21 |
| Target Operating Profit | 6000 |
Compute break-even units and target-profit units
Contribution margin is $45 - $21 = $24/unit. Covering $18,000 fixed costs takes 18000 / 24 = 750 units ($33,750 break-even revenue); earning $6,000 profit takes (18000 + 6000) / 24 = 1,000 units.
=ROUNDUP(B1 / (B2 - B3), 0)Guard underwater unit economics (Price <= Variable Cost)
If Price <= Variable Cost, each sale loses money or contributes $0, so break-even is impossible—guard with IF(B2<=B3, "Unprofitable unit margin", ...).
=IF(B2<=B3, "Unprofitable unit margin", ROUNDUP((B1 + B4) / (B2 - B3), 0))Try the example
Use the original values or change them to test your understanding.