Example : Calculation of the Break Even Point 1 . Total for Fixed Costs : Euro 1,500 a month
( includes rent , insurance , office equipment etc )
2 . Variable cost of producing one can of drink :
10 cents ( that is Euro 0.10 )
3 . Selling price to the customer / member :
25 cents ( that is Euro 0.25 )
4 . Contribution of each product to the fixed costs :
Sales price – variable cost
Therefore the contributionfrom each can sold is : 25c – 10c = 15c ( Euro 0.15 )
5 . Break Even point :
Fixed Costs / Contribution
Therefore to calculate how many cans need to be sold to break even and cover all costs :
1,500 / 0.15 = 10,000 cans
Thus , 10,000 cans need to be sold to break even and cover all costs .
Any cans sold over and above the 10 , 000 can will make a unit contribution to the profits of the social start up .
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