Marketing Analytics: Break$-$Even$/$Profit Analysis

Instructions:

Read the problem below and refer to the spreadsheet provided. The spreadsheet values highlighted in yellow can be manipulated in order to determine possible outcomes and answer the questions. You must answer the follow$-$up questions $($a$$e$)$ correctly to receive full credit.

Problem:

This problem lets you see the dynamics of break$-$even analysis. The starting values $($costs$,$ revenues, etc.$)$ for this problem are from the break$-$even analysis example in this chapter $($see Exhibit $188).$

The first column computes a break$-$even point. You can change costs and prices to figure new break$-$even points $($in units and dollars$).$ The second column goes further. There you can specify target profit level, and the unit and dollar sales needed to achieve your target profit level will be computed. You can also estimate possible sales quantities, and the program will compute costs, sales, and profits. Use a spreadsheet to address these issues.

Spreadsheet

The spreadsheet values outlined in yellow can be changed in order to determine possible outcomes. You can find the initial values in the corresponding blue cells in columns E and F$.$ Start by entering the initial values into columns B and C$.$ Then review the questions below and adjust the values in columns B and C to determine the correct answers.