Determining the Break-Even Point
Professional: You have been hired by Amy Overhouse, owner of asmall start-up company, to create a data table that analyzes thebreak-even point for a new product she is developing. She wouldlike you to analyze the break-even point for prices ranging from$12.99 to $17.99 per unit, in $0.50 increments. You can calculatethe number of units she must sell to break even (break-even point)if you know the fixed expenses, the price per unit, and the expense(cost) per unit. The following formula determines the break-evenpoint: Break-Even Point = Fixed Expenses / (Price per Unit -Expense per Unit) Assume Fixed Expenses = $7,000; Price per Unit =$14.99; and Expense per Unit = $8.00.
Part 1: Use the concepts and techniques presented in thischapter to determine the break-even point and then create the datatable. Use the Price per Unit as the input cell and the break-evenvalue as the result. Protect the worksheet so that only cells withdata can be selected. Submit the workbook as requested by yourinstructor.
Part 2: You can calculate additional break-even points by usinga two-way table and varying Fixed Expenses or Expense per Unit inaddition to Price per Unit. Which of the following provides theowner with a wider range of break-even points: varying FixedExpenses between $6500 and $7000 in increments of $250 or varyingExpense per Unit between $7.60 and $8.00 in increments of$0.20?
Highlight the one with the largest number of break-evenpoints.
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