Break-Even Visualizer -- Template with provision to portray discount and "crash-cost" effects

www.cortrapar.com

Copyright 2002 Corporate Training Partners, Inc.

traininginc@cortrapar.com

NOTES: No standardization exists in what costs organizations include in material and activity costs.
This template depends entirely on the judgment of the user in properly reflecting costs.
Many discount and excess-capacity costs increase on a non-linear (exponential) basis. In those cases,
this template will tend to underestimate the effects of aggressive discounting and over-capacity activity.
This template only applies discounts to units sold above capacity; if ALL units go down in price
as part of a discount, the impact is MUCH larger.
Instructions: Enter the data in the green user-data boxes as labeled.
The template creates a graph and data table of outcomes.
ATTENTION USER: Put cell A6 in the upper-left corner of your screen, to watch the graph update in real-time!
User Inputs:

Units per
Year
at 100% of
normal
short-term
Organization's
capacity (the
Period
capacity
(or "Fixed")
already in
Costs
place):
per year:

4,000,000 $70,000,000
Capacity

Fixed Costs

Sales Price
per unit when
sales rate
is well within
short-term
capacity

Percentage Unit
Price discount and/or
selling cost increase
to result in short-term
market share gains
to exceed short-term
capacity (0% = zero
selling cost increases or
discounts required to
gain share)

Material Cost
(or "Variable
Cost") per
unit produced
within normal
short-term
capacity :

Labor and
Activity Cost
(or "Variable
Cost") per
unit produced
within normal
short-term
capacity :

$90.00

23%

$28.00

$40.00

Unit Price

Share Gain Costs

Mat'l/Unit

Conv/Unit

Break Even Visualizer with capability to show discount and "crash-cost" effects
$700,000,000
$600,000,000
$500,000,000
$400,000,000
$300,000,000

Column C

$200,000,000
$100,000,000
$0
0

800,000
2,400,000
4,000,000
5,600,000
7,200,000
1,600,000
3,200,000
4,800,000
6,400,000
Units of Production & Sales

Table of Unit Sales, Gross Revenue, Costs, and Profit

Column D

Colum

Percent of
Short-Term
Capacity
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%
120%
130%
140%
150%
160%
170%
180%
190%

Unit
Sales
per Year
0
400,000
800,000
1,200,000
1,600,000
2,000,000
2,400,000
2,800,000
3,200,000
3,600,000
4,000,000
4,400,000
4,800,000
5,200,000
5,600,000
6,000,000
6,400,000
6,800,000
7,200,000
7,600,000

Gross Revenue
per year less
discounts and
special costs
$0
$36,000,000
$72,000,000
$108,000,000
$144,000,000
$180,000,000
$216,000,000
$252,000,000
$288,000,000
$324,000,000
$360,000,000
$387,720,000
$415,440,000
$443,160,000
$470,880,000
$498,600,000
$526,320,000
$554,040,000
$581,760,000
$609,480,000

Period
(or "Fixed")
Costs
per year
$70,000,000
$70,000,000
$70,000,000
$70,000,000
$70,000,000
$70,000,000
$70,000,000
$70,000,000
$70,000,000
$70,000,000
$70,000,000
$70,000,000
$70,000,000
$70,000,000
$70,000,000
$70,000,000
$70,000,000
$70,000,000
$70,000,000
$70,000,000

Material
Costs per
Year
$0
$11,200,000
$22,400,000
$33,600,000
$44,800,000
$56,000,000
$67,200,000
$78,400,000
$89,600,000
$100,800,000
$112,000,000
$124,768,000
$137,536,000
$150,304,000
$163,072,000
$175,840,000
$188,608,000
$201,376,000
$214,144,000
$226,912,000

Labor &
Conversion
Costs per
Year
$0
$16,000,000
$32,000,000
$48,000,000
$64,000,000
$80,000,000
$96,000,000
$112,000,000
$128,000,000
$144,000,000
$160,000,000
$178,880,000
$197,760,000
$216,640,000
$235,520,000
$254,400,000
$273,280,000
$292,160,000
$311,040,000
$329,920,000

scount and "crash-cost" effects

nginc@cortrapar.com
ctivity costs.

In those cases,
apacity activity.
n price

aph update in real-time!

Percentage
Percentage
Material Cost
Labor & Activity
increase above
Cost increase
normal
above normal
short-term
short-term
capacity
capacity
(0% =
(0% =
zero cost to
zero cost to
exceed capacity) exceed capacity)

14%

18%

Mat'l Crash Cost

Conv Crash Cost

d "crash-cost" effects

Column C

Column D

Column G

Total Costs
Per Year
Profit Per Year
$70,000,000
-$70,000,000
$97,200,000
-$61,200,000
$124,400,000
-$52,400,000
$151,600,000
-$43,600,000
$178,800,000
-$34,800,000
$206,000,000
-$26,000,000
$233,200,000
-$17,200,000
$260,400,000
-$8,400,000
$287,600,000
$400,000
$314,800,000
$9,200,000
$342,000,000
$18,000,000
$373,648,000
$14,072,000
$405,296,000
$10,144,000
$436,944,000
$6,216,000
$468,592,000
$2,288,000
$500,240,000
-$1,640,000
$531,888,000
-$5,568,000
$563,536,000
-$9,496,000
$595,184,000
-$13,424,000
$626,832,000
-$17,352,000

Profit as a
percentage
of Gross
Sales
-170%
-73%
-40%
-24%
-14%
-8%
-3%
0%
3%
5%
4%
2%
1%
0%
0%
-1%
-2%
-2%
-3%