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EXERCISE 6: BREAKEVEN ANALYSIS Breakeven Analysis allows you to assess how profitable a project will be based on how much you sell each unit for and how many units you sell. In the following example, assume you own a small company that has developed a new exercise device called "The Strider--that tells someone how far they have walked, how many calories they have burned and how many paces per mile they have talied. Assume the following facts. The machine that makes the device was purchased for $11,500. The microprocessors, the plastic case materials and the labor needed to assemble it costs $15 for each device. You have decided to sell the product directly to the consumer through a website promoted through aus The price you intend to charge each buyer for the "Strider is $42. Before you market the product, you decide to create a spreadsheet to estimate the revenues, costs, profits and "Breakeven Point. Go to the "Bus 1011 Excel Student Spreadsheets and click on the tab/worksheet labeled "Breakeven Analysis." Enter the following date: In B3 type 10000 units sold. In B4 type 542 per unit sales price, In BS enter the formula -B3 B4" to calculate the revenue. In B7 type $11,500 in fixed costs. In B8 type 15 as the variable costs associated with making each unit. In 810 enter the formula "-87-88*83" which is the fixed costs plus the $15 for each unit multiplied by the total number of units sold 10000. In B12 enter the formula "=85-810" to calculate the profits as revenues-costs. B14 calculates the Breakeven Point, which is FIXED COSTS/(PRICE-VARIABLE COSTS). Enter the formula "-B7/(B4-B8)" Note that the Breakeven Point is in units and should therefore be rounded. You should set up the spreadsheet with the appropriate formulas to change the price, cost and sales volume quickly. Answer the following questions: 1. What are your revenues, total expenses and profit if you sell 10,000 Striders? 2. What are your revenues, expenses and profit if you sell 15,000 Striders by lowering the price to $35 each? + Une Chart Bar Chart Breve Analysis come Shop How many Striders do you need to sell at Sa2 to make $500,000 in profits? Find the answer by entering different numbers in the appropriate Cell until you get the desired result) 4. How many Striders do you need to sell at $42 to break even? 11500/42-15 3) 500,000+ 11500/ 42-15

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