Break Even Calculator–ABC Company

Break Even Calculator – Description

This break even calculator has been designed to calculate your break even for a couple of different gross margin percentages. The idea is to see the impact of cost changes or pricing adjustments on the break even point. Although it can certainly be used for any level withitn your operations, starting with a single product, it is more typically used for the company or a department as a whole.

Enter your variables in the unshaded cells of the break even calculator. The shaded cells are read–only formulas.

Before you start using this break even calculator, organize your information and divide your costs between those that are variable and those that are fixed. Please refer to the definitions tab for further explanation of the difference between the two. Before you can get your results, you will need to know your gross margin ratio, which is calculated by subtracting your variable costs from your sales and dividing the result by the sales.

The result of the calculation performed by the break even calculator will appear in the very last line, before the buttons Compute and Reset. Those cells are shaded in green.

Once you enter all your variables into the break even calculator, press the Compute button to see the results. When you are ready to analyze your next scenario or set of assumptions, hit the Reset button and enter your new set of data.

Definitions used in the break even calculator:

Gross Profit Margin. The formula is: (Sales less Variable Costs)/Sales.

Variable costs. Costs directly related to the sales and influenced by the sales, i.e. the more you sell, the higher these costs. Typically, these include direct labor and materials when producing a product or personnel costs of employees providing services in a service organization. This break even calculator does not list variable costs. They are implied in the Gross Profit Margin.

Fixed Expenses. The expense categories listed on this break even calculator are just examples. They should match an average business pretty closely. If you find that your business is very different, you may need to procure a break even template. which can be customized to suit your needs.

Creditor Recurring Payments. This break even calculator does not only take into account expenses (as defined by accounting terminology), but also your cash outlays such as repayments of loans or creditor payments. Therefore, the result will not only be a break even operating profit number, but the amount of sales needed to cover all your cash needs.

Break Even Sales Forecast. Sales required to make a profit/cash flow of zero expressed as a dollar amount.