Break-Even Analysis for a QuickBooks Profit-Volume-Cost Analysis Workbook
The break-even analysis that a workbook makes based on the inputs that you enter is shown in the following figure. The break-even analysis shows the number of units required to break even in cell G3 and the sales revenue required to break even in cell G4. You calculate the total sales revenue required to break even.
You calculate the volume in units break-even point by dividing the sales revenue break-even point by the unit sales price.
The variable costs portion of the break-even analysis shows the amount spent on each of the costs. Cell G7 shows the amount that will be spent on direct labor.
The contribution margin, which is the same thing as gross margin, appears in cell G15. This shows the amount left over from sales revenue after paying the variable costs.
A fixed cost appears in cell G17. By subtracting the fixed costs from the contribution margin, the workbook calculates the break-even point, which should be zero but may not be because of a rounding error. In the figure, for example, the profit before vary-with-profit costs value equals –$135.
Although the information shown may seem to be voluminous, you conceptually understand all this data. A little forecast worksheet simply shows the sales revenue and the sales units that produce the break-even point. This worksheet also shows the amounts that you’ll spend on variable costs and fixed costs. Profits equal zero at the break-even point, so there aren’t any vary-with-profit costs.