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Mini Lesson: Break-Even Analysis

Revised August 2016


Requires Income Statement Project as Prerequisite

The Break Even Analysis is an analysis that determines the point where generated revenue is equal to
expenses. A firm is at its break-even point when total sales or revenues are equal to total expenses. The
purpose of calculating a firm's break-even point is to determine the point where sales reaches a volume at
which producing them becomes profitable.

Definitions of Important Terms


A break-even analysis contains two components, a break-even point in units and a break-even point in sales
dollar. The break-even point in units refers to the volume of sales a firm will need to reach in order to begin
turning a profit. The break-even point in sales dollar refers to the dollar amount a firm needs in order to
make a profit.
Break Even Point (in units) = Fixed Costs/(Unit Selling Price - Unit Cost)
Break Even Point (in sales dollar) = Fixed Costs/Profit Rate

Revenue is the income generated from the sale of goods or services.


Revenue = Units Sold x Price per Unit

Fixed costs are costs that do not change with the quantity of output. Examples of fixed costs include rent,
insurance premiums, or loan payments. If firm XYZ fixed costs were $2500, regardless of whether the firm
sells 0, 20, 50, or even 1000 products, the fixed costs will still be $2500. On the other hand, fixed costs per
unit will change as the quantity of output increases or decreases. If firm XYZ fixed costs were $2500, sales of
20 products will be $125 per unit, sales of 50 products will be $50 per unit, and sales of 1000 products will
be $2.50 per unit. In economics, this is known as economies of scale, as the quantity of output increases,
the price of producing each product decreases.

Variable costs are costs that change with the quantity of output. Examples of variable costs include wages,
utilities, or raw materials. As specified in the previous activity, Cost of Goods Sold (COGS) are costs
associated with creating products that a firm sells. For the purpose of this activity, the COGS is the only
variable cost.

Selling Price per Unit is the price a firm charges to sell the good or service they provide.

Cost of Goods Sold per Unit refers to the cost of producing one unit of the good or service.
Cost of Goods Sold per Unit = Selling Price per Unit - (Selling Price per unit x Profit Rate)

Click on the tab with the worksheet titled Activity 1 to begin.


ed revenue is equal to
l to total expenses. The
sales reaches a volume at

a break-even point in sales


d to reach in order to begin
a firm needs in order to

of fixed costs include rent,


dless of whether the firm
other hand, fixed costs per
d costs were $2500, sales of
sales of 1000 products will
ntity of output increases,

riable costs include wages,


d (COGS) are costs
y, the COGS is the only

provide.

or service.
Profit Rate)
Activity 1: Linking the Income Statement to the Break-Even Analysis

Sam's Furniture
Income Statement
For the Year Ending 4/30/2014

Revenue
Sales Revenue $250,000.00
(Less Sales Returns and Allowances) $0.00
Net Sales $250,000.00
Activity 1:
Cost of Goods Sold $112,500.00 Calculate the
Income State
Sold per Unit
Gross Profit $137,500.00 help.
Gross Profit Rate 55.00%
Directions:
Copy current
Expenses Enter formula
401 (k) $4,000.00 Enter formula
Advertising $11,500.00 Enter formula
Use AutoSum
Depreciation $2,650.00
Enter formula
Insurance $5,000.00 cell G31.
Interest $6,500.00 Enter formula
Payroll Tax $6,120.00 Change cells
Set cell M7 eq
Rent $15,000.00
Enter formula
Salaries $80,000.00 Set cell M8 eq
Supplies $3,500.00 Save file as Br
Utilities $2,500.00 Click on the t
Miscellaneous $1,500.00
Total Expenses $138,270.00

Net Income -$770.00


Profit Ratio -0.31%
Selling Price per Unit $350.00 Units sold
Cost of Goods Sold per Unit $157.50 714.2857
Profit Rate 55.00%
Annual Fixed Cost $138,270.00

Activity 1:
Calculate the Net Sales, Gross Profit, Total Expenses, Net Income, and Profit Ratio in the
Income Statement. Then using the Income Statement, determine the Cost of Goods
Sold per Unit, the Profit Rate, and the Annual Fixed Cost. Refer to the Mini Lesson for
help.

Directions:
Copy current worksheet to new worksheet and title it “Activity 1 Solution.”
Enter formula in cell G10 to calculate Net Sales.
Enter formula in cell G14 to calculate Gross Profit.
Enter formula in cell G15 to calculate the Gross Profit Rate.
Use AutoSum in cell G29 to calculate Total Expenses.
Enter formula in cell G31 to calculate Net Income. If there is a net loss, use red font in
cell G31.
Enter formula in cell G32 to calculate Profit Ratio.
Change cells G10, G14, and G29 to Bold Font.
Set cell M7 equal to the contents of cell G15.
Enter formula in cell M6 to calculate Cost of Goods Sold per Unit.
Set cell M8 equal to the contents of cell G29.
Save file as Break-Even XX, where XX are your initials.
Click on the tab for the worksheet titled Activity 2 to continue.
Activity 2: Introducing a Break-Even Table

Selling Price per Unit $350.00


Cost of Goods Sold per Unit $157.50 Activity 2:
Profit Rate 55.00% Based on the Income S
Annual Fixed Cost $138,270.00 ($250,000/$350). Even
the break-even point s
complete the Break Ev
Break-Even Table
X Y Y Y Y Directions:
Copy current workshee
Units Sold Revenue Variable Cost Fixed Cost Total Cost Link the amounts that
Use the Fill Handle for
Enter formula in cell C1
Price per Unit. Use the
Enter formula in cell D1
of Goods Sold per Unit
Link the value of the A
Fill Handle on cell E11
Enter formula in cell F1
F12:F31.
Select cells B8:F31 and
Change cells B10:F10 t
Select cells B11:B31 an
Take a look at the Reve
F for the first row wher
it too. These two rows
even point in sales doll
Save file.
Click on the tab for the
Activity 2:
Based on the Income Statement from Activity 1, Sam's Furniture sold roughly 715 units
($250,000/$350). Even with these sales, the firm still experienced a net loss. This suggests that
the break-even point should be greater than 715. Using the Income Statement from Activity 1,
complete the Break Even Table.

Directions:
Copy current worksheet to new worksheet and title it “Activity 2 Solution.”
Link the amounts that you calculated from the previous activity to cells E3:E6.
Use the Fill Handle for cells B11:B31 to set Units Sold in intervals of 50 from 0 to 1000.
Enter formula in cell C11 to calculate Revenue using an absolute cell reference to the Selling
Price per Unit. Use the Fill Handle on cell C11 to apply to cells C12:C31.
Enter formula in cell D11 to calculate Variable Cost using an absolute cell reference to the Cost
of Goods Sold per Unit. Use the Fill Handle on cell D11 to apply to cells D12:D31.
Link the value of the Annual Fixed Cost (cell E6) as an absolute cell reference to cell E11. Use the
Fill Handle on cell E11 to apply to cells E12:E31.
Enter formula in cell F11 to calculate Total Cost. Use the Fill Handle on cell F11 to apply to cells
F12:F31.
Select cells B8:F31 and use all borders.
Change cells B10:F10 to Bold Font.
Select cells B11:B31 and center align.
Take a look at the Revenue and Total Cost columns. Fill color to Yellow across columns B through
F for the first row where Revenue exceeds Total Cost, then Fill color to Yellow for the row above
it too. These two rows represent the range in which the break-even point in units and break-
even point in sales dollar is located.
Save file.
Click on the tab for the worksheet titled Activity 3 to continue.
Activity 2: Introducing a Break-Even Table

Selling Price per Unit $350.00


Cost of Goods Sold per Unit $157.50 Activity 2:
Profit Rate 55.00% Based on the Income S
Annual Fixed Cost $138,270.00 ($250,000/$350). Even
the break-even point s
complete the Break Ev
Break-Even Table
X Y Y Y Y Directions:
Copy current workshee
Units Sold Revenue Variable Cost Fixed Cost Total Cost Link the amounts that
0 $0.00 $0.00 $138,270.00 $138,270.00 Use the Fill Handle for
50 $17,500.00 $7,875.00 $138,270.00 $146,145.00 Enter formula in cell C1
100 $35,000.00 $15,750.00 $138,270.00 $154,020.00 Price per Unit. Use the
Enter formula in cell D1
150 $52,500.00 $23,625.00 $138,270.00 $161,895.00 of Goods Sold per Unit
200 $70,000.00 $31,500.00 $138,270.00 $169,770.00 Link the value of the A
250 $87,500.00 $39,375.00 $138,270.00 $177,645.00 Fill Handle on cell E11
300 $105,000.00 $47,250.00 $138,270.00 $185,520.00 Enter formula in cell F1
F12:F31.
350 $122,500.00 $55,125.00 $138,270.00 $193,395.00
Select cells B8:F31 and
400 $140,000.00 $63,000.00 $138,270.00 $201,270.00 Change cells B10:F10 t
450 $157,500.00 $70,875.00 $138,270.00 $209,145.00 Select cells B11:B31 an
500 $175,000.00 $78,750.00 $138,270.00 $217,020.00 Take a look at the Reve
F for the first row wher
550 $192,500.00 $86,625.00 $138,270.00 $224,895.00
it too. These two rows
600 $210,000.00 $94,500.00 $138,270.00 $232,770.00 even point in sales doll
650 $227,500.00 $102,375.00 $138,270.00 $240,645.00 Save file.
700 $245,000.00 $110,250.00 $138,270.00 $248,520.00 Click on the tab for the
750 $262,500.00 $118,125.00 $138,270.00 $256,395.00
800 $280,000.00 $126,000.00 $138,270.00 $264,270.00
850 $297,500.00 $133,875.00 $138,270.00 $272,145.00
900 $315,000.00 $141,750.00 $138,270.00 $280,020.00
950 $332,500.00 $149,625.00 $138,270.00 $287,895.00
1000 $350,000.00 $157,500.00 $138,270.00 $295,770.00
Activity 2:
Based on the Income Statement from Activity 1, Sam's Furniture sold roughly 715 units
($250,000/$350). Even with these sales, the firm still experienced a net loss. This suggests that
the break-even point should be greater than 715. Using the Income Statement from Activity 1,
complete the Break Even Table.

Directions:
Copy current worksheet to new worksheet and title it “Activity 2 Solution.”
Link the amounts that you calculated from the previous activity to cells E3:E6.
Use the Fill Handle for cells B11:B31 to set Units Sold in intervals of 50 from 0 to 1000.
Enter formula in cell C11 to calculate Revenue using an absolute cell reference to the Selling
Price per Unit. Use the Fill Handle on cell C11 to apply to cells C12:C31.
Enter formula in cell D11 to calculate Variable Cost using an absolute cell reference to the Cost
of Goods Sold per Unit. Use the Fill Handle on cell D11 to apply to cells D12:D31.
Link the value of the Annual Fixed Cost (cell E6) as an absolute cell reference to cell E11. Use the
Fill Handle on cell E11 to apply to cells E12:E31.
Enter formula in cell F11 to calculate Total Cost. Use the Fill Handle on cell F11 to apply to cells
F12:F31.
Select cells B8:F31 and use all borders.
Change cells B10:F10 to Bold Font.
Select cells B11:B31 and center align.
Take a look at the Revenue and Total Cost columns. Fill color to Yellow across columns B through
F for the first row where Revenue exceeds Total Cost, then Fill color to Yellow for the row above
it too. These two rows represent the range in which the break-even point in units and break-
even point in sales dollar is located.
Save file.
Click on the tab for the worksheet titled Activity 3 to continue.
Activity 3: Finding the Break-Even Point

Selling Price per Unit Activity 3:


Cost of Goods Sold per Unit Complete the two b
Profit Rate
Directions:
Annual Fixed Cost Copy current works
Copy the values fro
Break-Even Table Based on the range
Units Sold in interva
X Y Y Y Y Enter formula in cel
Units Sold Revenue Variable Cost Fixed Cost Total Cost per Unit. Use the Fi
Enter formula in cel
Goods Sold per Uni
Link the value of th
Fill Handle on cell E
Enter formula in cel
F12:F21.
Format cells C11:F2
Select cells B8:F21 a
Change cells B10:F1
Select cells B11:B21
Take a look at the R
through F for the fir
above it too. These
break-even point in
Based on the range
Break-Even Table to set Units Sold in
X Y Y Y Y Enter formula in cel
per Unit. Use the Fi
Units Sold Revenue Variable Cost Fixed Cost Total Cost Enter formula in cel
Goods Sold per Uni
Link the value of th
Fill Handle on cell E
Enter formula in cel
F27:F31.
Format cells C26:F3
Select cells B23:F31
Change cells B25:F2
Select cells B26:B31
Take a look at the R
you believe closely
Save file.
Click on the tab for
Activity 3:
Complete the two break-even tables.

Directions:
Copy current worksheet to new worksheet and title it “Activity 3 Solution.”
Copy the values from Activity 2 Solution (cells E3:E6) to cells E3:E6 of this worksheet.
Based on the range that you highlighted from Activity 2, use the Fill Handle for cells B11:B21 to set
Units Sold in intervals of 5.
Enter formula in cell C11 to calculate Revenue using an absolute cell reference to the Selling Price
per Unit. Use the Fill Handle on cell C11 to apply to cells C12:C21.
Enter formula in cell D11 to calculate Variable Cost using an absolute cell reference to the Cost of
Goods Sold per Unit. Use the Fill Handle on cell D11 to apply to cells D12:D21.
Link the value of the Annual Fixed Cost (cell E6) as an absolute cell reference to cell E11. Use the
Fill Handle on cell E10 to apply to cells E12:E21.
Enter formula in cell F11 to calculate Total Cost. Use the Fill Handle on cell F11 to apply to cells
F12:F21.
Format cells C11:F21 to Currency with 2 decimal places, comma separator, and $ symbol.
Select cells B8:F21 and use all borders.
Change cells B10:F10 to Bold Font.
Select cells B11:B21 and center align.
Take a look at the Revenue and Total Cost columns again. Fill color to Yellow across columns B
through F for the first row where Revenue exceeds Total Cost, then Fill color to Yellow for the row
above it too. These two rows represent the range in which the break-even point in units and
break-even point in sales dollar is located.
Based on the range that you highlighted from the step above, use the Fill Handle for cells B26:B31
to set Units Sold in intervals of 1.
Enter formula in cell C26 to calculate Revenue using an absolute cell reference to the Selling Price
per Unit. Use the Fill Handle on cell C26 to apply to cells C27:C31.
Enter formula in cell D26 to calculate Variable Cost using an absolute cell reference to the Cost of
Goods Sold per Unit. Use the Fill Handle on cell D26 to apply to cells D27:D31.
Link the value of the Annual Fixed Cost (cell E6) as an absolute cell reference to cell E26. Use the
Fill Handle on cell E26 to apply to cells E27:E31.
Enter formula in cell F26 to calculate Total Cost. Use the Fill Handle on cell F26 to apply to cells
F27:F31.
Format cells C26:F31 to Currency with 2 decimal places, comma separator, and $ symbol.
Select cells B23:F31 and use all borders.
Change cells B25:F25 to Bold Font.
Select cells B26:B31 and center align.
Take a look at the Revenue and Total Cost columns again. Fill color to Yellow for the two rows that
you believe closely represents the break-even point.
Save file.
Click on the tab for the worksheet titled Activity 3 to continue.
Activity 3: Finding the Break-Even Point

Selling Price per Unit $350.00 Activity 3:


Cost of Goods Sold per Unit $157.50 Complete the two b
Profit Rate 55.00%
Directions:
Annual Fixed Cost $138,270.00 Copy current works
Copy the values fro
Break-Even Table Based on the range
Units Sold in interva
X Y Y Y Y Enter formula in ce
Units Sold Revenue Variable Cost Fixed Cost Total Cost per Unit. Use the Fi
700 $ 245,000.00 $ 110,250.00 $ 138,270.00 $ 248,520.00 Enter formula in ce
705 $ 246,750.00 $ 111,037.50 $ 138,270.00 $ 249,307.50 Goods Sold per Uni
Link the value of th
710 $ 248,500.00 $ 111,825.00 $ 138,270.00 $ 250,095.00 Fill Handle on cell E
715 $ 250,250.00 $ 112,612.50 $ 138,270.00 $ 250,882.50 Enter formula in ce
720 $ 252,000.00 $ 113,400.00 $ 138,270.00 $ 251,670.00 F12:F21.
725 $ 253,750.00 $ 114,187.50 $ 138,270.00 $ 252,457.50 Format cells C11:F2
Select cells B8:F21
730 $ 255,500.00 $ 114,975.00 $ 138,270.00 $ 253,245.00
Change cells B10:F1
735 $ 257,250.00 $ 115,762.50 $ 138,270.00 $ 254,032.50 Select cells B11:B21
740 $ 259,000.00 $ 116,550.00 $ 138,270.00 $ 254,820.00 Take a look at the R
745 $ 260,750.00 $ 117,337.50 $ 138,270.00 $ 255,607.50 through F for the fir
above it too. These
750 $ 262,500.00 $ 118,125.00 $ 138,270.00 $ 256,395.00
break-even point in
Based on the range
Break-Even Table to set Units Sold in
X Y Y Y Y Enter formula in ce
per Unit. Use the Fi
Units Sold Revenue Variable Cost Fixed Cost Total Cost Enter formula in ce
715 $250,250.00 $112,612.50 $138,270.00 $250,882.50 Goods Sold per Uni
716 $250,600.00 $112,770.00 $138,270.00 $251,040.00 Link the value of th
717 $250,950.00 $112,927.50 $138,270.00 $251,197.50 Fill Handle on cell E
Enter formula in ce
718 $251,300.00 $113,085.00 $138,270.00 $251,355.00 F27:F31.
719 $251,650.00 $113,242.50 $138,270.00 $251,512.50 Format cells C26:F3
720 $252,000.00 $113,400.00 $138,270.00 $251,670.00 Select cells B23:F31
Change cells B25:F2
Select cells B26:B31
Take a look at the R
you believe closely
Save file.
Click on the tab for
Activity 3:
Complete the two break-even tables.

Directions:
Copy current worksheet to new worksheet and title it “Activity 3 Solution.”
Copy the values from Activity 2 Solution (cells E3:E6) to cells E3:E6 of this worksheet.
Based on the range that you highlighted from Activity 2, use the Fill Handle for cells B11:B21 to set
Units Sold in intervals of 5.
Enter formula in cell C11 to calculate Revenue using an absolute cell reference to the Selling Price
per Unit. Use the Fill Handle on cell C11 to apply to cells C12:C21.
Enter formula in cell D11 to calculate Variable Cost using an absolute cell reference to the Cost of
Goods Sold per Unit. Use the Fill Handle on cell D11 to apply to cells D12:D21.
Link the value of the Annual Fixed Cost (cell E6) as an absolute cell reference to cell E11. Use the
Fill Handle on cell E10 to apply to cells E12:E21.
Enter formula in cell F11 to calculate Total Cost. Use the Fill Handle on cell F11 to apply to cells
F12:F21.
Format cells C11:F21 to Currency with 2 decimal places, comma separator, and $ symbol.
Select cells B8:F21 and use all borders.
Change cells B10:F10 to Bold Font.
Select cells B11:B21 and center align.
Take a look at the Revenue and Total Cost columns again. Fill color to Yellow across columns B
through F for the first row where Revenue exceeds Total Cost, then Fill color to Yellow for the row
above it too. These two rows represent the range in which the break-even point in units and
break-even point in sales dollar is located.
Based on the range that you highlighted from the step above, use the Fill Handle for cells B26:B31
to set Units Sold in intervals of 1.
Enter formula in cell C26 to calculate Revenue using an absolute cell reference to the Selling Price
per Unit. Use the Fill Handle on cell C26 to apply to cells C27:C31.
Enter formula in cell D26 to calculate Variable Cost using an absolute cell reference to the Cost of
Goods Sold per Unit. Use the Fill Handle on cell D26 to apply to cells D27:D31.
Link the value of the Annual Fixed Cost (cell E6) as an absolute cell reference to cell E26. Use the
Fill Handle on cell E26 to apply to cells E27:E31.
Enter formula in cell F26 to calculate Total Cost. Use the Fill Handle on cell F26 to apply to cells
F27:F31.
Format cells C26:F31 to Currency with 2 decimal places, comma separator, and $ symbol.
Select cells B23:F31 and use all borders.
Change cells B25:F25 to Bold Font.
Select cells B26:B31 and center align.
Take a look at the Revenue and Total Cost columns again. Fill color to Yellow for the two rows that
you believe closely represents the break-even point.
Save file.
Click on the tab for the worksheet titled Activity 3 to continue.
Activity 4: Break-Even in Sales Dollars and # of Sales

Selling Price per Unit


Cost of Goods Sold per Unit
Profit Rate
Annual Fixed Cost

Break-Even Table
X Y Y Y Y Activity 4:
Units Sold Revenue Variable Cost Fixed Cost Total Cost Calculate the break
line graph with 4 lin

Directions:
Copy current works
Copy cells B3:F31 fr
Fill color for cells B9
Using the formula in
at Break-Even.
Enter the formula in
Total Sales at Break
Using the formula in
Selling Price per Un
Format cell E41 to N
Change cells B37:E3
Take a look at the To
Activity 2 and 3 cor
Highlight cells C10:C
Right click on the gr
as cells B11:B31.
Right click on the gr
Variable Cost, and s
Right click on the gr
Cost, and select cel
Right click on the gr
Cost, and select cel
On the Layout tab, s
Units.
On the Layout tab, s
On the Layout tab, s
Break-Even Point in Sales Dollars: Move this Text Box
Total Sales at Break-Even x Profit Rate = Fixed Costs Drag the bottom rig
Save file.
Total Sales at Break-Even =
Click on the tab wit
Total Sales at Break-Even =

Break-Even Point in # of Sales:


Break-Even Point in Units = Fixed Costs/(Selling Price per Unit - Variable Cost per Unit)
Break-Even Point in Units =
Activity 4:
Calculate the break-even point in sales dollars and the break even- point in number of sales. Then, create a
line graph with 4 lines, one for Revenue, Variable Cost, Fixed Cost, and Total Cost.

Directions:
Copy current worksheet into a new worksheet and title it “Activity 4 Solution.”
Copy cells B3:F31 from Activity 2 Solution and paste it to cells B3:F31 in this worksheet.
Fill color for cells B9:B31 to Light Grey, cells C9:C31 to Light Olive Green, and cells D9:D31 to Light Red.
Using the formula in cell E35, create a text formula in cell E36 that will allow you to calculate the Total Sales
at Break-Even.
Enter the formula in cell E37 using relative cell references to Fixed Costs and Profit Rate to calculate the
Total Sales at Break-Even.
Using the formula in cell E40, enter the formula in cell E41 using relative cell references to Fixed Costs,
Selling Price per Unit, and Variable Cost/COGS per Unit to calculate the Break-Even Point in Units.
Format cell E41 to Number with 2 decimal places.
Change cells B37:E37 and B41:E41 to Bold Font.
Take a look at the Total Sales at Break-Even and the Break-Even Point in Units. Make sure your answers from
Activity 2 and 3 correspond with these amounts.
Highlight cells C10:C31 and create a Line Graph with Markers.
Right click on the graph and choose Select Data. Click on Edit Horizontal (X) Axis Series and select the range
as cells B11:B31.
Right click on the graph and choose Select Data. Click on Add Legend Entries (Series), title the Series
Variable Cost, and select cells D11:D31.
Right click on the graph and choose Select Data. Click on Add Legend Entries (Series), title the Series Fixed
Cost, and select cells E11:E31.
Right click on the graph and choose Select Data. Click on Add Legend Entries (Series), title the Series Total
Cost, and select cells F11:F31.
On the Layout tab, select Axis Titles ---> Primary Horizontal Axis Title ---> Title Below Axis and name it
Units.
On the Layout tab, select Axis Titles ---> Primary Vertical Axis Title ---> Rotated Title and name it Dollars.
On the Layout tab, select Chart Title ---> Above Chart ---> and name it Break-Even Point.
Move this Text Box to the left corner of cell B43 and move the graph to the left corner of cell H8.
Drag the bottom right corner of the graph to enlarge it.
Save file.
Click on the tab with the worksheet titled Activity 5 to continue.

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Then, create a

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culate the

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Series Total

name it

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H8.
Activity 4: Break-Even in Sales Dollars and # of Sales

Selling Price per Unit $350.00


Cost of Goods Sold per Unit $157.50
Profit Rate 55.00%
Annual Fixed Cost $138,270.00

Break-Even Table
X Y Y Y Y
Units Sold Revenue Variable Cost Fixed Cost Total Cost $400,000.00
0 $0.00 $0.00 $138,270.00 $138,270.00
50 $17,500.00 $7,875.00 $138,270.00 $146,145.00 $350,000.00
100 $35,000.00 $15,750.00 $138,270.00 $154,020.00
150 $52,500.00 $23,625.00 $138,270.00 $161,895.00 $300,000.00
200 $70,000.00 $31,500.00 $138,270.00 $169,770.00
250 $87,500.00 $39,375.00 $138,270.00 $177,645.00
$250,000.00
300 $105,000.00 $47,250.00 $138,270.00 $185,520.00
350 $122,500.00 $55,125.00 $138,270.00 $193,395.00

Dollars
$200,000.00
400 $140,000.00 $63,000.00 $138,270.00 $201,270.00
450 $157,500.00 $70,875.00 $138,270.00 $209,145.00
$150,000.00
500 $175,000.00 $78,750.00 $138,270.00 $217,020.00
550 $192,500.00 $86,625.00 $138,270.00 $224,895.00
600 $210,000.00 $94,500.00 $138,270.00 $232,770.00 $100,000.00

650 $227,500.00 $102,375.00 $138,270.00 $240,645.00


700 $245,000.00 $110,250.00 $138,270.00 $248,520.00 $50,000.00
750 $262,500.00 $118,125.00 $138,270.00 $256,395.00
800 $280,000.00 $126,000.00 $138,270.00 $264,270.00 $0.00
0 50
850 $297,500.00 $133,875.00 $138,270.00 $272,145.00
900 $315,000.00 $141,750.00 $138,270.00 $280,020.00
950 $332,500.00 $149,625.00 $138,270.00 $287,895.00
1000 $350,000.00 $157,500.00 $138,270.00 $295,770.00

Break-Even Point in Sales Dollars:


Total Sales at Break-Even x Profit Rate = Fixed Costs
Total Sales at Break-Even =
Total Sales at Break-Even = $251,400.00

Break-Even Point in # of Sales:


Break-Even Point in Units = Fixed Costs/(Selling Price per Unit - Variable Cost per Unit)
Break-Even Point in Units = 718.29

Activity 4:
Calculate the break-even point in sales dollars and the break even- point in number of sales. Then, create a line
graph with 4 lines, one for Revenue, Variable Cost, Fixed Cost, and Total Cost.

Directions:
Copy current worksheet into a new worksheet and title it “Activity 4 Solution.”
Copy cells B3:F31 from Activity 2 Solution and paste it to cells B3:F31 in this worksheet.
Fill color for cells B9:B31 to Light Grey, cells C9:C31 to Light Olive Green, and cells D9:D31 to Light Red.
Activity 4:
Calculate the break-even point in sales dollars and the break even- point in number of sales. Then, create a line
graph with 4 lines, one for Revenue, Variable Cost, Fixed Cost, and Total Cost.

Directions:
Copy current worksheet into a new worksheet and title it “Activity 4 Solution.”
Copy cells B3:F31 from Activity 2 Solution and paste it to cells B3:F31 in this worksheet.
Fill color for cells B9:B31 to Light Grey, cells C9:C31 to Light Olive Green, and cells D9:D31 to Light Red.
Using the formula in cell E35, create a text formula in cell E36 that will allow you to calculate the Total Sales at
Break-Even.
Enter the formula in cell E37 using relative cell references to Fixed Costs and Profit Rate to calculate the Total
Sales at Break-Even.
Using the formula in cell E40, enter the formula in cell E41 using relative cell references to Fixed Costs, Selling
Price per Unit, and Variable Cost/COGS per Unit to calculate the Break-Even Point in Units.
Format cell E41 to Number with 2 decimal places.
Change cells B37:E37 and B41:E41 to Bold Font.
Take a look at the Total Sales at Break-Even and the Break-Even Point in Units. Make sure your answers from
Activity 2 and 3 correspond with these amounts.
Highlight cells C10:C31 and create a Line Graph with Markers.
Right click on the graph and choose Select Data. Click on Edit Horizontal (X) Axis Series and select the range as
cells B11:B31.
Right click on the graph and choose Select Data. Click on Add Legend Entries (Series), title the Series Variable
Cost, and select cells D11:D31.
Right click on the graph and choose Select Data. Click on Add Legend Entries (Series), title the Series Fixed Cost,
and select cells E11:E31.
Right click on the graph and choose Select Data. Click on Add Legend Entries (Series), title the Series Total Cost,
and select cells F11:F31.
On the Layout tab, select Axis Titles ---> Primary Horizontal Axis Title ---> Title Below Axis and name it Units.
On the Layout tab, select Axis Titles ---> Primary Vertical Axis Title ---> Rotated Title and name it Dollars.
On the Layout tab, select Chart Title ---> Above Chart ---> and name it Break-Even Point.
Move this Text Box to the left corner of cell B43 and move the graph to the left corner of cell H8.
Drag the bottom right corner of the graph to enlarge it.
Save file.
Click on the tab with the worksheet titled Activity 5 to continue.
Break Even Point
$400,000.00

$350,000.00

$300,000.00

$250,000.00
Dollars

$200,000.00

$150,000.00

$100,000.00

$50,000.00

$0.00
0 50 100 150 200 250 300 350 400 450 500 550 600 650 700 750 800

Units

Revenue Vari abl e Cost Fi xed Cost Total Cost

nit)

er of sales. Then, create a line

sheet.
D9:D31 to Light Red.
er of sales. Then, create a line

sheet.
D9:D31 to Light Red.
to calculate the Total Sales at

fit Rate to calculate the Total

rences to Fixed Costs, Selling


in Units.

ke sure your answers from

eries and select the range as

ies), title the Series Variable

ies), title the Series Fixed Cost,

ies), title the Series Total Cost,

ow Axis and name it Units.


le and name it Dollars.
n Point.
orner of cell H8.
600 650 700 750 800 850 900 950 1000

Total Cost
Activity 5: Graphing the Break-Even Point

Selling Price per Unit $14.29 Activity 5:


Cost of Goods Sold per Unit Calculate the break
Profit Rate 46.37% line graphs; one line
Annual Fixed Cost $62,354.00 Directions:
Copy current works
Break-Even Table Enter formula in cel
Use the Fill Handle
X Y Y Y Y Enter formula in cel
Units Sold Revenue Variable Cost Fixed Cost Total Cost Use the Fill Handle
Enter formula in cel
Goods Sold per Sale
Link the value of th
on cell E11 to apply
Enter formula in cel
Format cells C11:F3
Select cells B8:F31 a
Change cells B10:F1
Select cells B11:B31
Fill color for cells B9
Using the formula in
at Break-Even.
Enter the formula in
Sales at Break-Even
Using the formula in
Selling Price per Un
Format cell E41 to N
Change cells B37:E3
Highlight cells C10:F
Edit the Horizontal
Select Primary Hori
Select Primary Verti
Select Chart Title, A
Move this Text Box
Save file.

Break-Even Point in Sales Dollars:


Total Sales at Break-Even x Average Profit Rate = Fixed Costs
Total Sales at Break-Even =
Total Sales at Break-Even =

Break-Even Point in # of Sales:


Break-Even Point in Units = Fixed Costs/(Selling Price per Unit - Variable Cost per Unit)
Break-Even Point in Units =
Activity 5:
Calculate the break-even point in sales dollars and the break-even point in number of sales. Then, create two
line graphs; one line graph for Revenue and Total Cost and another for Variable Cost and Fixed Cost.

Directions:
Copy current worksheet into a new worksheet and title it “Activity 5 Solution.”
Enter formula in cell E4 to calculate the Average Cost of Goods Sold per Sale.
Use the Fill Handle for cells B11:B31 to set Units Sold in intervals of 500 from 0 to 10,000.
Enter formula in cell C11 to calculate Revenue using an absolute cell reference to the Selling Price per Unit.
Use the Fill Handle on cell C11 to apply to cells C12:C31.
Enter formula in cell D11 to calculate Variable Cost using an absolute cell reference to the Average Cost of
Goods Sold per Sale. Use the Fill Handle on cell D11 to apply to cells D12:D31.
Link the value of the Annual Fixed Cost (cell E6) as an absolute cell reference to cell E11. Use the Fill Handle
on cell E11 to apply to cells E12:E31.
Enter formula in cell F11 to calculate Total Cost. Use the Fill Handle on cell F11 to apply to cells F12:F31.
Format cells C11:F31 to Currency with 2 decimal places, comma separator, and $symbol.
Select cells B8:F31 and use all borders.
Change cells B10:F10 to Bold Font.
Select cells B11:B31 and center align.
Fill color for cells B9:B31 to Light Grey, cells C9:C31 to Light Olive Green, and cells D9:F31 to Light Red.
Using the formula in cell E35, create a text formula in cell E36 that will allow you to calculate the Total Sales
at Break-Even.
Enter the formula in cell E37 using relative cell references to Fixed Costs and Profit Rate to calculate the Total
Sales at Break-Even.
Using the formula in cell E40, enter the formula in cell E41 using relative cell references to Fixed Costs,
Selling Price per Unit, and Variable Cost/COGS per Unit to calculate the Break-Even Point in Units.
Format cell E41 to Number with 2 decimal places.
Change cells B37:E37 and B41:E41 to Bold Font.
Highlight cells C10:F31 and create a Line Graph with Markers.
Edit the Horizontal (X) Axis Series by selecting the range of cells for Units Sold (cells C10:F31).
Select Primary Horizontal Axis Title, Title Below the Axis, and change the title to Units.
Select Primary Vertical Axis Title, Rotated Title, and change the title to Dollars.
Select Chart Title, Above Chart, and change the name to Break-Even Point.
Move this Text Box to the left corner of cell B43, move the Break-Even graph to the left corner of cell H11.
Save file.

nit)
hen, create two
d Cost.

Price per Unit.

erage Cost of

the Fill Handle

ls F12:F31.

ight Red.
the Total Sales

culate the Total

ed Costs,
nits.

r of cell H11.
Activity 5: Graphing the Break-Even Point

Selling Price per Unit $14.29


Cost of Goods Sold per Unit $7.66
Profit Rate 46.37%
Annual Fixed Cost $62,354.00

Break-Even Table
X Y Y Y Y
Units Sold Revenue Variable Cost Fixed Cost Total Cost
0.00 $ - $ - $ 62,354.00 $ 62,354.00 $160,000.00
500.00 $ 7,145.00 $ 3,831.86 $ 62,354.00 $ 66,185.86
1000.00 $ 14,290.00 $ 7,663.73 $ 62,354.00 $ 70,017.73 $140,000.00
1500.00 $ 21,435.00 $ 11,495.59 $ 62,354.00 $ 73,849.59
$120,000.00
2000.00 $ 28,580.00 $ 15,327.45 $ 62,354.00 $ 77,681.45
2500.00 $ 35,725.00 $ 19,159.32 $ 62,354.00 $ 81,513.32
$100,000.00
3000.00 $ 42,870.00 $ 22,991.18 $ 62,354.00 $ 85,345.18
3500.00 $ 50,015.00 $ 26,823.04 $ 62,354.00 $ 89,177.04 $80,000.00
4000.00 $ 57,160.00 $ 30,654.91 $ 62,354.00 $ 93,008.91

Dollars
4500.00 $ 64,305.00 $ 34,486.77 $ 62,354.00 $ 96,840.77 $60,000.00
5000.00 $ 71,450.00 $ 38,318.64 $ 62,354.00 $ 100,672.64
$40,000.00
5500.00 $ 78,595.00 $ 42,150.50 $ 62,354.00 $ 104,504.50
6000.00 $ 85,740.00 $ 45,982.36 $ 62,354.00 $ 108,336.36
$20,000.00
6500.00 $ 92,885.00 $ 49,814.23 $ 62,354.00 $ 112,168.23
7000.00 $ 100,030.00 $ 53,646.09 $ 62,354.00 $ 116,000.09 $-
7500.00 $ 107,175.00 $ 57,477.95 $ 62,354.00 $ 119,831.95 00 00 00
0. 00. 00.
8000.00 $ 114,320.00 $ 61,309.82 $ 62,354.00 $ 123,663.82 5 10
8500.00 $ 121,465.00 $ 65,141.68 $ 62,354.00 $ 127,495.68
9000.00 $ 128,610.00 $ 68,973.54 $ 62,354.00 $ 131,327.54
9500.00 $ 135,755.00 $ 72,805.41 $ 62,354.00 $ 135,159.41
10000.00 $ 142,900.00 $ 76,637.27 $ 62,354.00 $ 138,991.27

Break-Even Point in Sales Dollars:


Total Sales at Break-Even x Average Profit Rate = Fixed Costs
Total Sales at Break-Even =
Total Sales at Break-Even = $ 134,470.56

Break-Even Point in # of Sales:


Break-Even Point in Units = Fixed Costs/(Selling Price per Unit - Variable Cost per Unit)
Break-Even Point in Units = 9410.12

Activity 5:
Calculate the break-even point in sales dollars and the break-even point in number of sales. Then, create two line
graphs; one line graph for Revenue and Total Cost and another for Variable Cost and Fixed Cost.

Directions:
Copy current worksheet into a new worksheet and title it “Activity 5 Solution.”
Enter formula in cell E4 to calculate the Average Cost of Goods Sold per Sale.
Use the Fill Handle for cells B11:B31 to set Units Sold in intervals of 500 from 0 to 10,000.
Activity 5:
Calculate the break-even point in sales dollars and the break-even point in number of sales. Then, create two line
graphs; one line graph for Revenue and Total Cost and another for Variable Cost and Fixed Cost.

Directions:
Copy current worksheet into a new worksheet and title it “Activity 5 Solution.”
Enter formula in cell E4 to calculate the Average Cost of Goods Sold per Sale.
Use the Fill Handle for cells B11:B31 to set Units Sold in intervals of 500 from 0 to 10,000.
Enter formula in cell C11 to calculate Revenue using an absolute cell reference to the Selling Price per Unit. Use
the Fill Handle on cell C11 to apply to cells C12:C31.
Enter formula in cell D11 to calculate Variable Cost using an absolute cell reference to the Average Cost of Goods
Sold per Sale. Use the Fill Handle on cell D11 to apply to cells D12:D31.
Link the value of the Annual Fixed Cost (cell E6) as an absolute cell reference to cell E11. Use the Fill Handle on
cell E11 to apply to cells E12:E31.
Enter formula in cell F11 to calculate Total Cost. Use the Fill Handle on cell F11 to apply to cells F12:F31.
Format cells C11:F31 to Currency with 2 decimal places, comma separator, and $symbol.
Select cells B8:F31 and use all borders.
Change cells B10:F10 to Bold Font.
Select cells B11:B31 and center align.
Fill color for cells B9:B31 to Light Grey, cells C9:C31 to Light Olive Green, and cells D9:F31 to Light Red.
Using the formula in cell E35, create a text formula in cell E36 that will allow you to calculate the Total Sales at
Break-Even.
Enter the formula in cell E37 using relative cell references to Fixed Costs and Profit Rate to calculate the Total
Sales at Break-Even.
Using the formula in cell E40, enter the formula in cell E41 using relative cell references to Fixed Costs, Selling
Price per Unit, and Variable Cost/COGS per Unit to calculate the Break-Even Point in Units.
Format cell E41 to Number with 2 decimal places.
Change cells B37:E37 and B41:E41 to Bold Font.
Highlight cells C10:F31 and create a Line Graph with Markers.
Edit the Horizontal (X) Axis Series by selecting the range of cells for Units Sold (cells C10:F31).
Select Primary Horizontal Axis Title, Title Below the Axis, and change the title to Units.
Select Primary Vertical Axis Title, Rotated Title, and change the title to Dollars.
Select Chart Title, Above Chart, and change the name to Break-Even Point.
Move this Text Box to the left corner of cell B43, move the Break-Even graph to the left corner of cell H11.
Save file.
Break Even Point
$160,000.00

$140,000.00

$120,000.00

$100,000.00

$80,000.00
Dollars

$60,000.00

$40,000.00

$20,000.00

$-
00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00
0. 00. 00. 00. 00. 00. 00. 00. 00. 00. 00. 00. 00. 00. 00. 00. 00. 00. 00. 00. 00.
5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100

Units

Revenue Va ri abl e Cost Fi xed Cost Total Cost

nit)

ales. Then, create two line


xed Cost.

00.
ales. Then, create two line
xed Cost.

00.
elling Price per Unit. Use

he Average Cost of Goods

1. Use the Fill Handle on

to cells F12:F31.
ol.

31 to Light Red.
culate the Total Sales at

e to calculate the Total

s to Fixed Costs, Selling


nits.

0:F31).

corner of cell H11.


00 00 00
00. 00. 00.
90 95 100

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