When we undertake a sensitivity analysis of a project or when we look at alternative scenarios, we are asking how serious it would be if sales or costs turned out to be worse than we forecasted. Managers sometimes prefer to rephrase this question and ask how bad sales can get before the project begins to lose money. This exercise is known as break-even analysis.
This model includes two analyses:
- Quantity Break-Even Analysis,
- Price Break-Even Analysis.
In the first analysis you will be able to find what quantity do you need to sell in order to cover all of your expenses.
In the second analysis, you will be able to find out what price level will cover all of the expenses if you can produce fixed product quantity.
There are clear step-by-step instructions included.