BREAK EVEN POINT

g INTRODUCTION
The break-even point helps to provide a dynamic view of the relationships between sales, costs and profits. The break-even point is a special case of Target Income Sales, where Target Income is 0 (breaking even). But most of the time, manager have to make their BEP table on real data, and the would like to know aproximentively and quickly what could be the value of the break even point in terms of quantitie. So the here after proposed model give a tool to know where is the critical level of production on the base of four exogeneous variables :

Exogeneous variable :
= Increment (it depends on the production process)
= Fixed Costs (given by the accounting departement)
= Unit Price (given by the sales depertment)
= Variable Costs (given by the accounting department)

Endogeneous variables :
= Quantity of production as the value of the break even point


g THE EXCEL SPREADSHEET

= Increment : Exogeneous variable
= Fixed Costs : Exogeneous variable
= Variable Costs : Exogeneous variable
= Unit Price : Exogeneous variable
= BEP : Quantity = Fixed Costs / (Unit Price - Variable Costs)


g THE FIELDS ARE :
= Ref : just to number a row
= Quantity : Production in terms of number of units
= Fixed Costs : Costs of production which are constant
= Variable Costs : Costs of production per units of production
= Unit Price : Market value of one unit if production
= Total Costs : Fixed Costs + (Quatities x Variables Costs)
= Total Incomes : Quantities x Unit Price
= P/L : Binary (Profit or Loss. It is a conditionnal cell)