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Break-Even Analysis


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Breakeven Analysis

Click Here to Download our FREE Stand-alone Excel Breakeven Analysis Worksheets.


Breakeven analysis is a tool used by businesses to determine the level of sales needed in order to breakeven. On this page is a breakeven tool that is used to determine at what level sales need to be in order to make a specific profit (target profit).

To perform breakeven analysis, you must first be familiar with the different types of costs that are incurred to develop a product. These costs can be fixed or variable in nature, and will effect the analysis differently.


Please fill the required fields (no commas, only numbers). All sections require the fixed costs to be entered. We have pre-entered some numbers for you.


From Your Financial Report Enter:

Total Sales =
Fixed Costs =
Variable Costs =
Selling Price Per Unit =
Target Profit =
.

    

TERMS DEFINED

Target profit
Companies are usually more concerned about realizing a specific profit level, as opposed to breaking even. By specifying the target profit required, you can compute the sales needed to achieve this target.

Fixed costs and variable costs
A variable cost varies directly with the number of units produced. Each unit produced will incur a specific cost (materials required etc.), this cost to the company will increase in direct proportion to the number of units produced. That is, the more units that are produced, the greater the variable cost.
  • Typical variable costs are:
    Materials
    Commission/hourly wage
    Variable utilities (machine power etc.)
A fixed cost remains constant for a particular range of activity. That is, regardless of the number of units produced within a range, the fixed costs will remain constant.
  • Typical fixed costs are:
    Rent, mortgage
    Equipment
    Salary
    Fixed utilities (factory lighting etc.)



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