Analysis for calculating when a business will have paid itself.
It is necessary to find the unit contribution margin \( M \) in order to find the breakeven point. You find the margin by subtracting the variable cost per unit \( C_v \) from price per unit \( P \) .
\[ P-C_v=M \]
If the investment put into the business \( I \) is then divided by the unit contribution margin found before, the breakeven volume \( B_v \) can be found or in other words, the number of units the business needs to sell before it has paid back all the fixed cost.
\[ A/M=B_v \]
After this point, the revenue will be a profit minus the variable cost.
The breakeven revenue \( B_r \) can be found by multiplying the breakeven volume \( B_v \) with the selling price