Question 1

How do you calculate break-even point?

Accepted Answer

Break-even units = Fixed Costs / (Price Per Unit - Cost Per Unit). The denominator is your contribution margin. For example, with $5,000 fixed costs, $50 price, and $20 cost: 5000 / (50-20) = 167 units to break even.

Question 2

What counts as a fixed cost?

Accepted Answer

Fixed costs are expenses that don't change with sales volume: rent, salaries, insurance, software subscriptions, loan repayments, and utilities. Variable costs change with each unit sold: materials, shipping, payment processing fees, and sales commissions.

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