The break-even point is the sales level at which sales revenue covers total expenses but no profit has yet been generated. For a manufacturing business, this account shows how many products must be sold or how much revenue must be generated to cover monthly fixed costs. The break‑even point changes when the selling price or production cost changes.
Calculate How Many Sales You Will Make Profit From
Enter the amounts excluding VAT for the same period. Add material, labor, energy, packaging and similar expenses that occur as the product quantity increases to the variable unit cost.
The account is for a single product or a group of products with similar contribution margins.
Break-Even Point Formula
Break‑even sales volume = Total fixed costs ÷ (Unit selling price − Variable unit cost)
Difference in parentheses is the unit contribution margin Shows the amount left after covering the fixed costs of each sold product and then generating profit.
fixed expense
Rent, management salary, insurance, depreciation and similar expenses continue even if the production amount changes in the short term.
Variable unit cost
The share of materials, direct labor, subcontracting, energy, packaging and shipping that occurs as the number of products increases.
Contribution margin
The amount remaining for fixed expenses and profit after subtracting the variable unit cost from the sales price.
Sample Account for a Manufacturing Business
Monthly total.
Per product.
Per product.
1.250 − 750 TL.
2,400 units
1,200,000 TL fixed expense ÷ 500 TL unit contribution. The turnover at this level is 3,000,000 TL.
3,000 pieces
The total of fixed expenses and target profit is divided by a contribution margin of 500 TL. The required turnover is 3,750,000 TL.
Does the production capacity meet 2,400 units?
Break-even analysis shows the required amount of sales; It does not indicate whether this amount can be produced with the existing machinery, labor and shift capacity. result by production capacity calculation Evaluate together.
How to Calculate If There is More than One Product?
If a business sells products with different sales prices and contribution margins, applying the single product formula to the total quantity may be misleading. First, the expected sales mix should be determined, and then the weighted average contribution margin should be calculated according to the share of each product in sales.
Separate products
Find the selling price, variable cost and contribution margin for each product group separately.
Determine sales mix
Use each group's expected share of units or packages in total sales.
Refresh with every change
If the rate of low-contribution products increases, more sales are required for the same fixed expense.
Factors That Change the Break-Even Point the Most
Discount and sales price
The discount directly reduces the contribution margin. Calculating at list price and excluding the actual discount will underestimate the breakeven amount.
Waste and rework
When the material and labor consumed per solid product increases, the variable unit cost increases. Scope of product cost in the product cost calculation guide and examine it.
Machinery and energy cost
The production share per product should be updated as cycle time, capacity utilization and energy costs change. Detailed account In the machine hour cost article you can find it.
Fixed expense increase
New rent, machinery investment or management expense increases fixed costs. Even if sales volume does not change, the break-even point is moved forward.
The break-even calculation shows the required total sales level of the business; alone does not explain what the same product yields to different customers and delivery conditions. Discount, transportation, maturity and actual cost impact in order-based profitability guide and review it.
To determine the costs that will be included in the break-even calculation production cost guide Also check out; Keep the distinction between fixed and variable expenses specific to this account.
Frequently Asked Questions
Are break-even points and profits the same thing?
No. At the break-even point, revenue covers total expenses and the result is zero. Profit consists of contributions above this level.
Is the loan installment added to the fixed expense?
Loan principal is not the same as accounting expense. The cash plan and the profitability account should be evaluated separately. Also the ability to pay in the cash flow plan and examine it.
Is VAT taken into account?
For a comparable result, sales and cost amounts should be used with the same tax approach, usually excluding VAT.
How often should the account be renewed?
When sales price, labor, material, energy, exchange rate or product mix change significantly; for regular management it should be refreshed at least monthly.
Identify data gaps impacting profitability
Examine where your product cost, discount, capacity and sales targets differ from each other with Korgün process analysis.