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Mixed Sales Break-Even Worked Example

Reconcile a two-product composite basket through contribution, rounded break-even quantities and the final operating profit at those quantities.

By PriceAndProfit Editorial Updated

The assumed sales pattern is two units of product A for every unit of B. Product A sells for $30 with $18 variable cost; product B sells for $50 with $30 variable cost. A composite basket combines that ratio even if customers do not buy a physical bundle. The basket carries $44 toward the fixed costs.

Basket CM = 2 × ($30 − $18) + ($50 − $30) = $44
Hypothetical worked values; no market or statutory rates
StepCalculationResult
Fixed costs One planning period $1,000
Basket revenue 2 × $30 + 1 × $50 $110
Basket variable cost 2 × $18 + 1 × $30 $66
Basket contribution $110 − $66 $44
Exact basket threshold $1,000 ÷ $44 22.7273 baskets
Whole baskets Round upward 23 baskets
Product quantities 23 × 2 A; 23 × 1 B 46 A and 23 B
Revenue 23 × $110 $2,530
Operating profit 23 × $44 − $1,000 $12

How to read and reuse this example

The exact threshold falls between 22 and 23 baskets. At 22 baskets the business contributes $968 and loses $32 after fixed costs. At 23 it contributes $1,012 and has $12 of operating profit. The worksheet therefore uses 23 baskets and calculates revenue from that same rounded quantity rather than mixing exact and rounded values.

Boundaries and exceptions

The ratio must be feasible in actual demand. If customers shift toward one product, recompute the basket rather than averaging the two margin percentages. Product-level capacity can also constrain the result. This example assumes no unsold inventory change, no step increase in fixed costs and no additional variable fees beyond those already entered.

Method reference: OpenStax: Multi-Product Break-Even Analysis. Checked October 22, 2026. Composite units assume a fixed sales mix.

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