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Break-Even Analysis Example Excel-Template

The document provides examples of calculating break-even point using formulas. It shows calculating contribution per unit, break-even point, total sales required, and the impact of increasing variable costs. It also shows a break-even graph and an example calculating weighted average price and break-even for multiple products.

Uploaded by

Fernando Flor
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© © All Rights Reserved
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
38 views

Break-Even Analysis Example Excel-Template

The document provides examples of calculating break-even point using formulas. It shows calculating contribution per unit, break-even point, total sales required, and the impact of increasing variable costs. It also shows a break-even graph and an example calculating weighted average price and break-even for multiple products.

Uploaded by

Fernando Flor
Copyright
© © All Rights Reserved
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Break-Even Analysis Excel Template

Visit: www.educba.com
Email: [email protected]
Let us look at a simple example which uses the above formula to calculate Break Even cost:

Particulars Amount
Variable Costs $400
Selling Price per unit $600
Desired Profit $400,000
Fixed Costs $1,000,000

A Contribution per unit is calculated by using the formula given below


Contribution per unit = Selling Price – Variable Costs

Contribution per unit $200

Break - Even Point is calculated by using the formula given below


Break-Even = Fixed Costs / Contribution per Unit

Break - Even $5,000

Total Sales Required to Achieve Break-Even Point is Calculated as


Total Sales = Break-Even Point  * Selling Price per unit

Total Sales $3,000,000


Let us look at an example of break-even analysis by plotting total cost and total revenue equations on the graph, which is kn
as a Break-even graph. We will plot the output on the horizontal axis and costs and profit will be plotted on the vertical axis
Franco Co-operation makes iron benches and wants to determine the break-even point. The total fixed cost
for his business is $60,000 and the variable cost is $40 per bench. He sells the bench for $100 per unit.

Particulars Amount
Fixed Cost $60,000
Variable Cost $40
Selling Price per unit $100

A Contribution per Unit is calculated by using the formula given below


Contribution per Unit = Selling Price – Variable Costs

Contribution per unit $60

Break - Even Point is calculated by using the formula given below


Break-Even = Fixed Costs / Contribution per Unit

Break - Even $1,000

The below table shows the fixed costs, variable costs, total costs and profit
generated when a certain number of units are sold

Units Fixed Costs Variable cost Total cost Profit


100 60,000 4,000 64,000 10,000
200 60,000 8,000 68,000 20,000
300 60,000 12,000 72,000 30,000
400 60,000 16,000 76,000 40,000
500 60,000 20,000 80,000 50,000
600 60,000 24,000 84,000 60,000
700 60,000 28,000 88,000 70,000
800 60,000 32,000 92,000 80,000
900 60,000 36,000 96,000 90,000
1,000 60,000 40,000 100,000 100,000
1,100 60,000 44,000 104,000 110,000
1,200 60,000 48,000 108,000 120,000
1,300 60,000 52,000 112,000 130,000
1,400 60,000 56,000 116,000 140,000
1,500 60,000 60,000 120,000 150,000
1,600 60,000 64,000 124,000 160,000
1,700 60,000 68,000 128,000 170,000
1,800 60,000 72,000 132,000 180,000

Graph highlights the total cost and profit

200,000

180,000

160,000
200,000

180,000

160,000

140,000

120,000

100,000

80,000

60,000

40,000

20,000

0
0 100 200 300 400 500 600 700 800 900 1,000 1,100 1,200 1,300 1,400 1,500 1,600 1,700 1,800

Profit Total cost


ations on the graph, which is known
l be plotted on the vertical axis.
total fixed cost
1,600 1,700 1,800
Below is the income statement provided by a firm for a month.

Particulars Amount
Sales- 3000 units at $80/ unit $240,000
Less: -
Cost of Goods Sold
Variable Costs $180,000
Fixed Production Costs $19,800
Gross Margin $40,200
Less: -
Selling and Administrative Expenses
Variable Costs $21,000
Fixed Production Costs $7,500
Net Income Before Taxes $11,700

No of Units Produce 3000


Selling Price per Unit $80
Variable Costs $67
Fixed Costs $27,300

Break - Even Point is calculated by using the formula given below


Break-Even = Fixed Costs / (Selling Cost - Variable Cost)

Break - Even $2,100

If the variable costs increase by $4 what will be the change in break even point?

Break - Even Point is calculated by using the formula given below


Break-Even = Fixed Costs / (Selling Cost - Variable Cost)

Break - Even $3,033


Let us now look at an example where we will calculate the break-even point for multiple products.

Product Price $ Proportion to Weighted Average


Revenue
Coffe 3 50%
Latte 3.5 30%
Choclate 4 20% 3.35

Product Variable Cost $ Proportion to Weighted Average


Revenue
Coffe 0.5 50%
Latte 0.6 30%
Choclate 0.7 20% 0.57

Fixed Cost $55,000

Weighted Average Price is calculated as

Weighted Average Price $19,784

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