A break–even analysis is an analysis to determine the point at which revenue received equals the costs associated with receiving the revenue. Break–even analysis calculates what is known as a margin of safety, the amount that revenues exceed the break–even point.
What to write: Word Document
- Create and name your own business (fictional business with made-up data sets)
- Describe your business’ mission statement: provide a one sentence “formal summary of the aims and values of a company, organization, or individual.”
- Business operation description for break-even analysis
- Describe your product
- Discuss Fixed Costs (land, factory/plant, equipment, etc.)
- Discuss Variable Costs (labor, materials/parts, power supply, water, etc.)
- Use the formula provided in the excel sheet below. How are the data tables designed using the formula?
- How are the results of the tables designed using the formula?
- Your decision-making guidelines
- Which data table is suitable for your business?
- Where is the break-even point – the number of units sold?
- When do you need to make the break-even point; 3 months, 6 months, 1 year? Explain why.
- Data Tables – copy and paste both tables: data table 1 and data table 2
- Screenshots (alt + PrtScn, then paste it to your Word doc) of Excel Sheet with Charts
What to use: Excel File
- Open Excel file attached.
- According to your business product, update both data tables. You can focus on the red italicized costs in the tables shown below. You must change all numbers.
- All the numbers MUST be different from the sample sheet.
|Unit Sold||Fixed Costs||Variable Costs||Sell Price||Profit Contribution|
|Units Sold||Fixed Costs||Variable Costs||Sell Price||Profit Contribution|
Let me know if you have any questions,