Break-even Point in Units

The break-even point in units for Oil Change Co. is the number of cars it needs to service in order to cover the company’s fixed and variable expenses. The break-even point formula is to divide the total amount of fixed costs by the contribution margin per car:

Break-even Point in Cars per Week = Fixed Expenses per week ÷ Contribution Margin per car

Break-even Point in Cars per Week = $2,400 per week ÷ $15 per Car

Break-even Point in Cars per Week = 160 Cars per Week

It’s always a good idea to check your calculations. The following schedule confirms that the break-even point is 160 cars per week:

Oil Change Co.
Projected Net Income
For a Week

Sales (160 cars serviced at $24 per car)

$ 3,840

Variable Expenses (160 cars at $9 per car)

1,440

Contribution Margin

2,400

Fixed Expenses

2,400

Net Income

$ 0