Question

Objective: This activity has the purpose of helping students calculate the Breakeven point using the software Microsoft Excel to perform a sensitivity analysis. (Objective 4) Student Instructions: Read example to be used to compute the Breakeven point. Textbook problem 13 - 1 (Blank, L. & Tarquin, A. ), page 459: The fixed cost at Harley Motors are $1 million annually. The main product has revenues of $8.50 per unit and $4.25 variable cost. Determine the breakeven quantity per year and the annual profit if 200,000 units are sold and if 350,000 units are sold? 1. Have available the Microsoft Excel software program. 2. Construct a table in the Microsoft Excel work sheet as shown below. The instructions are shown in the second table. E F G 1000000 Fixed costs = variable costs = Sale price = MENE: Breakeven point = 235294.1 No. of products = Profit = 235295 3.75 3. The construction of the Microsoft Excel sheets and the answered questions has a total grading value of eight (8) points. When finished malene to click Submit

Answer 1

			if sales price is changes to 7.5			if variable cost is changed to 4.00
sales	8.5		7.5					8.5
variable cost	4.25		4.25					4
contribution / unit	4.25	Sales - variable cost	3.25					4.5
Fixed cost	1000000		1000000					1000000
Profit
Break even point	fixed cost / contribution		break even point				break even point
	235294		307692.3077					222222.2
profit	sales - variable cost - fixed cost
	235294 * 8.50 - 235294* 4.25 - 1000000
	-0.5
if 200000 units are sold then profit
	(200000 * 8.5 ) - ( 200000* 4.25 ) - 1000000
profit	-150000
if 350000 units are sold then profit
	(350000 * 8.5 ) - ( 350000* 4.25 ) - 1000000
profit	487500

True and Fales

1. Fales , there is no profit when 200000 units are sold. there is loss of $ 150000

2. True there is profit when 350000 units are solve there is profit of $ 487500

3. true when sales price reduced to 7.5 break even point is higher

307692

4.False decrease in variable cost leads to fall in the value of break even point /quantity.

it falls to

222222