Desired Profit in Units

Let’s say that the owner of Oil Change Co. needs to earn a profit of $1,200 per week rather than merely breaking even. You can consider the owner’s required profit of $1,200 per week as another fixed expense. In other words the fixed expenses will now be $3,600 per week (the $2,400 listed earlier plus the required $1,200 for the owner). The new point needed to earn $1,200 per week is shown by the following break-even formula:

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

Break-even Point in Cars per Week = $3,600 per week ÷ $15 per Car

Break-even Point in Cars per Week = 240 Cars per Week

Always check your calculations:

Oil Change Co.
Projected Net Income
For a Week

Sales (240 cars serviced at $24 per car)

$ 5,760

Variable Expenses (240 cars at $9 per car)

2,160

Contribution Margin

3,600

Fixed Expenses

2,400

Net Income

$ 1,200

The above schedule confirms that servicing 240 cars during a week will result in the required $1,200 profit for the week.