Lab 3: Consider This: Your turn

Apply your creative thinking and problem-solving skills to design and implement a solution.

Determine the Break Even Point

Part 1: You have been hired by Alison Chang, owner of a small start- up company, to create a data table that analyzes the break-even point for a new product she is developing. She would like you to analyze the break-even point for prices ranging from $12.99 to $17.99 per unit, in $0.50 increments. You can calculate the 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-even point.

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.

Use the concepts and techniques presented in this module to determine the break-even point and then create the data table. Use the Price per Unit as the input cell and the break-even value as the result. Protect the worksheet so that only cells with data can be selected. Submit your assignment in the format specified by your instructor.

You can calculate additional break-even points by using a two-way table and varying Fixed Expenses or Expense per Unit in addition to Price per Unit. Which of the following provides the owner with a wider range of break-even points: varying Fixed Expenses between $6500 and $7000 in increment of $250 or varying Expense per Unit between $7.60 and $8.00 in increments of $0.20?

Part 2: You made several decisions while creating the worksheet for this assignment. How did you set up the worksheet? How did you decide how to create the data table? What additional break-even points did you calculate, and why?