Calculating BreakEven Mathematically using
the CONTIBUTION method
This method uses a simple formula to work out how much
each unit produced and sold contributes to the covering of
By calculating the contribution of each product to fixed costs
is possible to know how many units will need to be produced
and sold to cover all the fixed costs and therefore breakeven.
Breakeven = Fixed costs
Selling price – variable costs
selling price =£15
variable costs per unit of £11.
Fixed costs = £20,000
Therefore £20,000 = 5,000 units