Since the 13th output, net profit has become positive. Let's fill in the table and see what output will help the enterprise ensure cost recovery. Net profit is income without fixed and variable production costs.Marginal revenue is a gross income without variable costs.Income is the product of the volume of production and the price of the goods.Total costs are the sum of variables and fixed costs.Variable costs depend on the volume of output.We compile the following table with the formulas to solve these tasks: Calculate the volume of sales which will perform breakeven.
Establish a relationship between these parameters. Find the volume of production in which the company will receive a net profit.We will enter the data in the Excel table: This is the cost of raw materials, utility bills for the use of energy resources on production facilities, wages of workers, etc. Variable costs (depend on production volumes). This is lease payments, taxes, salaries for management, leasing payments, etc. Natural units: fixed cost / (price - average variable costs).Īttention! Variable costs are taken from the calculation per unit of output (not common).įixed costs (independent of the production process or sale).Monetary equivalent: (revenue*fixed costs) / (revenue - variable costs).There are 2 ways to calculate the breakeven point in Excel: The lower the break-even point of the volume of production and sales, the higher the solvency and financial stability of the firm. This indicator is expressed in quantitative or monetary units. In the economic sense, it is an indicator of a critical situation when profits and losses are zero. The break-even point reflects the volume of production and sales of goods and services which cover all the costs of the enterprise. Calculation of break-even point with examples in Excel
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