Contribution comes first
Everything in a break-even calculation rests on contribution: the selling price of one unit less what that unit cost to make. That amount is what goes towards the fixed costs, and fixed costs divided by it gives the number of units at which they are fully covered.
If variable cost exceeds price there is no break-even point at all. Every additional unit deepens the loss, so no volume covers the fixed costs. The tool reports nothing rather than an enormous number, because "there is no answer" is the accurate output.
Filings do not tell you the fixed costs
Fixed and variable costs are the two inputs here you cannot lift off a financial statement. An income statement splits costs into cost of revenue and operating expenses, not into fixed and variable. Cost of revenue contains both materials, which vary, and factory depreciation, which does not.
So an outside estimate is involved. One approach is to lay out several years of revenue and total costs and treat the portion that moved with revenue as variable and the portion that did not as fixed. A rougher start is to call depreciation and most payroll fixed, and materials and freight variable.
Given the estimate, the tool is more useful for sensitivity than for a single figure. Raising the fixed-cost assumption by 20% and watching what happens to the break-even volume says how exposed the business is to being wrong. Where the numbers are your own — a business plan rather than someone else's filing — they can be used directly.
Leverage is most dangerous near the point
The degree of operating leverage says how far operating profit moves for a 1% move in sales. Just above break-even it is enormous: at 5,100 units in the example figures it is 51 times, which means a 2% fall in sales wipes out the entire operating profit.
As volume rises the figure falls towards 1: the fixed costs are already covered, so the contribution from extra sales passes through almost unchanged. The same company therefore has low leverage in good times and high leverage in bad ones — the sensitivity grows precisely as profit shrinks, and that is the risk in a fixed-cost business.
At break-even itself the figure does not exist: operating profit is zero and the ratio divides by it. The blank is not a failure but a property of the measure at that one point.