1. Identify Sensitive Variables
Principles of Cost Analysis and Management
Show Slide #1: Identify Sensitive Variables
References: FM 1-06, Slides, Handouts, Excel Spreadsheets
Facilitator Material: Each primary facilitator should possess a lesson plan, slide deck, course handouts, and practical exercise, and FM All required references and technical manuals will be provided by the School House
Learner Material: Learners should possess standard classroom supplies, course handouts, practical exercises, FM All required references and technical manuals will be provided by the School House.
Facilitator Actions: 30 Classroom Breakdown
Testing Requirements/Assessment: Learners will take the Principles of Cost Analysis and Management 2 Exam at the end of Week Two. Learners must score 80% or higher and International officers must score 70% or higher.
9.2

2. We assume cross traffic will stop. What if our assumption is incorrect?
Show Slide #2: Motivator
Facilitator’s Note: (Facilitator Read and facilitate discussion)
We make assumptions every day of our lives; for example, when we drive on the highway, we assume that other drivers will obey traffic signals. We assume that when we go through an intersection with a green light, the cross traffic will stop at its red light. Assumptions simplify our lives and, as we learned in the last lesson, our calculations. But what if our assumptions are incorrect?

3. Terminal Learning Objective
Action: Identify Sensitive Variables
Condition: FM Leaders in a classroom environment working as a member of a small group, using doctrinal and administrative publications, self-study exercises, personal experiences, practical exercises, handouts, and discussion.
Standard: With at least 80% accuracy, you must:
Review the key variables and assumptions in the Breakeven Equation
Define “sensitive variables”
Breakeven Analysis Spreadsheet, Calculate the new breakeven point using each changed assumption
Calculate breakeven selling price for a given sales quantity
Solve for missing variables in the breakeven equation given changed assumptions
Identify and enter relevant scenario data into macro enabled templates to calculate Sales Mix Breakeven
Show Slide #3 TLO
Action: Identify Sensitive Variables
Condition: FM Leaders in a classroom environment working as a member of a small group, using doctrinal and administrative publications, self-study exercises, personal experiences, practical exercises, handouts, and discussion.
Standard: With at least 80% accuracy, you must:
Review the key variables and assumptions in the Breakeven Equation
Define “sensitive variables”
Breakeven Analysis Spreadsheet, Calculate the new breakeven point using each changed assumption
Calculate breakeven selling price for a given sales quantity
Solve for missing variables in the breakeven equation given changed assumptions
Identify and enter relevant scenario data into macro enabled templates to calculate Sales Mix Breakeven
Instructional Lead-in: In our last lesson we learned the profit equation and applied the concept of “zero profit” to that equation to determine a break even point:

4. Review: Key Variables and Assumptions:
The Breakeven Equation:
Revenue - Variable Cost - Fixed Cost = Profit
What are the key variables?
Revenue = #Units Sold * Selling Price $/Unit
Variable Cost = #Units Sold * Variable Cost $/Unit
Assumes… ONLY ONE product or service is sold
Revenue = #Units Sold * Selling Price $/Unit
Variable Cost = #Units Sold * Variable Cost $/Unit
Show Slide #4: Review: Key Variables and Assumptions:
1. Learning Step/Activity #1. Review the key variables and assumptions in the Breakeven Equation
Method of Instruction: DSL (large or small group discussion)
Facilitator to Learner Ratio: 2:25
Time of Instruction: 10 minutes
Media: Slides, Printed Reference Materials
Facilitator's Note: Before facilitating this lesson, ask the Learners which of the 21st Century Soldier Competency do they think pertain to this lesson? Facilitate a discussion on the answers given and at the end of the lesson revisit it and see if the Learners still believe their choice are the same.
Note: For this lesson these competencies should be talked about.
Communication and Engagement (Oral, written, and negotiation)
Critical thinking, intergovernmental, and multinational competence
Tactical and Technical Competence
Throughout the lesson discussion seek opportunities to link the competencies with the lesson content through the Learner’s experiences.
Facilitator’s Note: Facilitate discussion using the slide)
The equation is : Revenue - Variable Cost - Fixed Cost = Profit
The key variables are Revenue, Variable Cost and Fixed Cost.
Revenue is expressed as # units sold * Selling price $/Unit (For every unit sold, revenue increases by selling price $/unit)
Variable Cost is expressed as # units sold * VC $/Unit (For every unit sold, total VC increases by VC $/unit)
Using units of measure, in both expressions “unit” would cancel and the product would be stated in dollars.
In order to keep the equation to one unknown, we assume only one product or service.
ONLY ONE product or service is sold

5. Importance of Assumptions
Making assumptions is inescapable in managerial costing
There is simply too much to measure and too many ways to measure it
Reasonable assumptions simplify and facilitate the measurement process
Bad assumptions result in poor management decision making
Show Slide #5: Importance of Assumptions
Facilitator’s Note: (Facilitator read and facilitate discussion using the slide)
Making assumptions is inescapable in managerial costing.
There is simply too much to measure and too many ways to measure it.
Reasonable assumptions simplify and facilitate the measurement process
The breakeven equation, for example, assumes that variable costs are strictly linear. That is, they increase by an equal amount for each unit sold or produced. This may not be 100% true, but if it is generally true, it is a simplifying assumption that makes it much easier to calculate the breakeven point that is reasonably accurate and useful for managerial purposes.
Bad assumptions result in poor management decision making
If any of the key variables in the breakeven equation changes, the breakeven point will also change. The breakeven point will be inaccurate, and any decisions based upon it will be flawed.

6. LSA #1 Check on Learning
Q1. What are two key assumptions in Breakeven Analysis? A1. Assumes that only one product is sold and that variable costs are linear on a per-unit basis. Q2. Why are assumptions important? A2. To simplify the calculation so that the cost of calculating breakeven point doesn’t exceed the benefit of the information. However, it’s important to have valid assumptions, because bad or invalid assumptions will result in poor decisions.
Show Slide #6: LSA #1 Check on Learning
Facilitator’s Note: Ask the following Questions; (Facilitate discussion on answers given)
Q1. What are two key assumptions in Breakeven Analysis?
A1. Assumes that only one product is sold. Also assumes that variable cost is linear on a per-unit basis.
Q2. Why are assumptions important?
A2. To simplify the calculation so that the cost of calculating breakeven point doesn’t exceed the benefit of the information. However, it’s important to have valid assumptions, because bad or invalid assumptions will result in poor decisions.

7. LSA #1 Summary Show Slide #7: LSA #1 Summary
Facilitator Read: During this LSA we discussed:
Review: Key Variables and Assumptions:
Importance of AAssumptions

8. What is Sensitivity Analysis?
Recognizes that the validity of the decision depends on the validity of the underlying assumptions
Requires the Decision Maker to identify assumptions
Tests the validity of assumptions through What-If scenarios
Show Slide #8: What is Sensitivity Analysis?
2. Learning Step/Activity #2. Define “sensitive variables”
Method of Instruction: DSL (large or small group discussion)
Facilitator to Learner Ratio: 2:25
Time of Instruction: 5 minutes
Media: Slides, Printed Reference Materials
Facilitator’s Note: (Facilitator read and facilitate discussion using the slide)
Assumptions are not bad in and of themselves. In fact, as stated in the prior slide, they are inescapable and necessary. What is important is to recognize the assumptions that are inherent in the cost model.
The Decision maker, or the Cost analyst who assists the decision maker, must identify the assumptions and then test them to see if they are valid. Assumptions can be tested using “what if” scenarios.

9. What if?
How does my decision point or breakeven point change if I change an assumption or an estimate?
How does that change affect the overall result?
Large overall changes resulting from relatively minor changes in assumptions and estimates represent sensitive variables
Show Slide #9: What if?
Facilitator’s Note: (Facilitator read and facilitate discussion using the slide)
We can test assumptions by CHANGING them, to see what happens to the breakeven point or decision point.
How does the breakeven point change?
How does that affect the overall result?
More importantly, how might the decision change as a result of the new results?
Definition of sensitive variable:
Large overall changes resulting from relatively minor changes in assumptions and estimates represent sensitive variables

10. LSA #2 Check on Learning
Q1. How do we test our assumptions? A1. By changing them to see how it affects the breakeven point or decision point Q2. What is a sensitive variable? A2. A variable in which relatively small changes in the assumptions or estimates result in large overall changes in the breakeven point or decision point
Show Slide #10: LSA #2 Check on Learning
Facilitator’s Note: Ask the following Questions; (Facilitate discussion on answers given)
Q1. How do we test our assumptions?
A1. By changing them to see how it affects the breakeven point or decision point
Q2. What is a sensitive variable?
A2. A variable in which relatively small changes in the assumptions or estimates result in large overall changes in the breakeven point or decision point.

11. LSA #2 Summary Show Slide #11: LSA #2 Summary
Facilitator Read: During this LSA we discussed:
Define “sensitive variables”
What is Sensitivity Analysis?
Definition of sensitive variable

12. What If? Example: Sebastian’s Dinner Theater
Revenue = $30/Ticket
Variable Cost = $10/Ticket
Fixed Cost = $2000
Breakeven point = 100 Tickets
How does breakeven point in units change if:
Price decreases by $5/Ticket? Increases by $10?
Unit variable cost increases 20%? Decreases 10%?
Fixed cost increases by 10%? Decreases by 20%?
Show Slide #12: What If?
3. Learning Step/Activity #3. Breakeven Analysis Spreadsheet, Calculate the new breakeven point using each changed assumption
Method of Instruction: DSL (large or small group discussion)
Facilitator to Learner Ratio: 2:25
Time of Instruction: 5 minutes
Media: Slides, Printed Reference Materials
Facilitator’s Note: (Facilitator Refer Spread sheet 9.2)
Which changed assumptions cause large changes in the breakeven point in units?
Which variables would you identify as sensitive?
Price decreases by $5/Ticket?
$25/ticket*#tickets - $10/ticket*#tickets – 2000 = 0
Breakeven = 133 tickets
Price increases by $10?
$40/ticket*#tickets - $10/ticket*#tickets – 2000 = 0
Breakeven = 67 tickets
Unit variable cost increases 20%?
$30/ticket*#tickets - $12/ticket*#tickets – 2000 = 0
Breakeven = 111 tickets
Unit variable cost decreases by 10%?
$30/ticket*#tickets - $9/ticket*#tickets – 2000 = 0
Breakeven = 95 tickets
Fixed cost increases by 10%?
$30/ticket*#tickets - $10/ticket*#tickets – 2200 = 0
Breakeven = 110 tickets
Fixed cost decreases by 20%?
$30/ticket*#tickets - $10/ticket*#tickets – 1600 = 0
Breakeven = 80 tickets

13. Sensitive Variables $5 decrease in ticket price (17%) causes:
25% decrease in unit Contribution Margin
33% increase in the breakeven point in units
The 20% increase in unit Variable Cost causes:
10% decrease in unit Contribution Margin
11% increase in breakeven point in units
Which variable would you define as sensitive?
Show Slide #13: Sensitive Variables
Facilitator’s Note: (Facilitator read and facilitate discussion using the slide)
$5 decrease in ticket price (17%) causes:
25% decrease in unit Contribution Margin
33% increase in the breakeven point in units. This means that we must sell 33% more tickets to breakeven if we decrease the ticket price. This is a relatively large change given the small change in ticket price. Even so, if the reduction in ticket price makes it possible for us to sell more tickets, this might still be a good move. The point is that we are testing the assumptions.
The 20% increase in unit Variable Cost causes:
10% decrease in unit Contribution Margin
11% increase in breakeven point in units
Which variable would you define as sensitive? It is the relatively small (17%) decrease in ticket price that causes a large change both in contribution margin (-25%) and breakeven point (+33%). Therefore we would call that a sensitive variable. The 20% increase in variable cost does affect contribution margin and breakeven point, but the effect is smaller than the change in estimate/assumption.

14. LSA #3 Check on Learning
Q1. How will breakeven point in units change if fixed cost increases? A1. Breakeven point in units will also increase, because there is more fixed cost to overcome Q2. How will breakeven point in units change if Contribution Margin increases? A2. Breakeven point in units will decrease, because more is contributed toward fixed costs and profit by each unit sold.
Show Slide #14: LSA #3 Check on Learning
Facilitator’s Note: Ask the following Questions; (Facilitate discussion on answers given)
Q1. How will breakeven point in units change if fixed cost increases?
A1. Breakeven point in units will also increase, because there is more fixed cost to overcome.
Q2. How will breakeven point in units change if Contribution Margin increases?
A2. Breakeven point in units will decrease, because more is contributed toward fixed costs and profit by each unit sold.

15. LSA #3 Summary Show Slide #15: LSA #3 Summary
Facilitator Read: During this LSA we discussed:
Breakeven Analysis Spreadsheet, Calculate the new breakeven point using each changed assumption
Which changed assumptions cause large changes in the breakeven point in units
Which variables would you identify as sensitive?
Sensitive Variables

16. Sensitivity and Breakeven
The breakeven equation includes five variables:
Number of Units, Selling Price per Unit, Variable Cost per Unit, Fixed Cost, and Target Profit
Revenue – VC – FC = Profit
t*#Units) – (VC$/Unit*#Units) – FC = Profit
So far, we have assumed all variables are known except Number of Units
What if one of the other variables is the unknown?
-or-
(PriciRevenue – VC – FC = Profit
(Price$/Unit*#Units) – (VC$/Unit*#Units) – FC = Profit
Show Slide #16: Sensitivity and Breakeven
4. Learning Step/Activity #4. Calculate breakeven selling price for a given sales quantity
Method of Instruction: DSL (large or small group discussion)
Facilitator to Learner Ratio: 2:25
Time of Instruction: 15 minutes
Media: Slides, Printed Reference Materials
Facilitator’s Note: (Facilitator read and facilitate discussion using the slide)
The breakeven equation includes five variables:
Number of Units, Selling Price per Unit, Variable Cost per Unit, Fixed Cost, and Target Profit
Facilitator’s Note: Facilitate discussion using the slide)
The five variables fit into the breakeven equation as follows:
The breakeven equation is Revenue – VC – FC = Profit which would be zero when the goal is to breakeven. REVENUE, highlighted here, is expressed as Price$/Unit*#Units

17. Sensitivity and Breakeven (Cont.)
The breakeven equation includes five variables:
Number of Units, Selling Price per Unit, Variable Cost per Unit, Fixed Cost, and Target Profit
Revenue – VC – FC = Profit
-or-
(Price$/Unit*#Units) – (VC$/Unit*#Units) – FC = Profit
So far, we have assumed all variables are known except Number of Units
What if one of the other variables is the unknown?
Show Slide #17: Sensitivity and Breakeven
Facilitator’s Note: Facilitate discussion using the slide)
Variable Cost is expressed as VC$/Unit*#Units

18. Sensitivity and Breakeven (Cont.)
The breakeven equation includes five variables:
Number of Units, Selling Price per Unit, Variable Cost per Unit, Fixed Cost, and Target Profit
Revenue – VC – FC = Profit
-or-
(Price$/Unit*#Units) – (VC$/Unit*#Units) – FC = Profit
So far, we have assumed all variables are known except Number of Units
What if one of the other variables is the unknown?
Show Slide #18: Sensitivity and Breakeven
Facilitator’s Note: Facilitate discussion using the slide)
So, the variable “number of units” appears twice in the equation, as a factor in Revenue and in Variable Cost.

19. Sensitivity and Breakeven (Cont.)
The breakeven equation includes five variables:
Number of Units, Selling Price per Unit, Variable Cost per Unit, Fixed Cost, and Target Profit
Revenue – VC – FC = Profit
-or-
(Price$/Unit*#Units) – (VC$/Unit*#Units) – FC = Profit
So far, we have assumed all variables are known except Number of Units
What if one of the other variables is the unknown?
Show Slide #19: Sensitivity and Breakeven
Facilitator’s Note: Facilitate discussion using the slide)
Selling price per unit is a component of the expression for revenue

20. Sensitivity and Breakeven (Cont.)
The breakeven equation includes five variables:
Number of Units, Selling Price per Unit, Variable Cost per Unit, Fixed Cost, and Target Profit
Revenue – VC – FC = Profit
-or-
(Price$/Unit*#Units) – (VC$/Unit*#Units) – FC = Profit
So far, we have assumed all variables are known except Number of Units
What if one of the other variables is the unknown?
Show Slide #20: Sensitivity and Breakeven
Facilitator’s Note: Facilitate discussion using the slide)
Variable cost per unit is a component of the expression for total Variable Cost

21. Sensitivity and Breakeven (Cont.)
The breakeven equation includes five variables:
Number of Units, Selling Price per Unit, Variable Cost per Unit, Fixed Cost, and Target Profit
Revenue – VC – FC = Profit
-or-
(Price$/Unit*#Units) – (VC$/Unit*#Units) – FC = Profit
So far, we have assumed all variables are known except Number of Units
What if one of the other variables is the unknown?
Show Slide #21: Sensitivity and Breakeven
Facilitator’s Note: Facilitate discussion using the slide)
Then, there is fixed cost…

22. Sensitivity and Breakeven (Cont.)
The breakeven equation includes five variables:
Number of Units, Selling Price per Unit, Variable Cost per Unit, Fixed Cost, and Target Profit
Revenue – VC – FC = Profit
-or-
(Price$/Unit*#Units) – (VC$/Unit*#Units) – FC = Profit
So far, we have assumed all variables are known except Number of Units
What if one of the other variables is the unknown?
Show Slide #22: Sensitivity and Breakeven
Facilitator’s Note: Facilitate discussion using the slide)
…and Target Profit, which would be zero when we are calculating breakeven.

23. Sensitivity and Breakeven (Cont.)
The breakeven equation includes five variables:
Number of Units, Selling Price per Unit, Variable Cost per Unit, Fixed Cost, and Target Profit
Revenue – VC – FC = Profit
-or-
(Price$/Unit*#Units) – (VC$/Unit*#Units) – FC = Profit
So far, we have assumed all variables are known except Number of Units
What if one of the other variables is the unknown?
Show Slide #23: Sensitivity and Breakeven
Facilitator’s Note: Facilitate discussion using the slide)
So far, we have assumed all variables are known except Number of Units. What if one of the other variables is the unknown?

24. What If’s Involving Other Variables
What if quantity of tickets is limited to 80 due to building capacity?
Task: Calculate the breakeven price per ticket
How would you set up the equation?
What is the unknown variable?
How would you express Revenue? Variable Cost?
Show Slide #24: What Ifs Involving Other Variables
Facilitator’s Note: Facilitate discussion using the slide)
Quantity of tickets is limited to 80 due to building capacity. What is the breakeven price per ticket?
How would you set up the equation?
The equation would be based on the breakeven equation: Revenue - Variable Cost - Fixed Cost = Profit
Questions to ask are:
What is the unknown variable? Frequently Learners will arrive at an incorrect answer because they are solving for the wrong variable.
While in the prior examples we were solving for Number of Units (#Tickets in this case) here we are solving for Ticket Price in dollars ($Price)
How would you express Revenue? Revenue = #Units Sold * Selling Price $/Unit (or Ticket)
Therefore, Revenue = 80 Tickets * $Price/Ticket
How would you express Variable Cost? Variable Cost = #Units Sold * $VC/Unit (or Ticket)
$VC/Unit is $10 (given on slide #13)
Therefore, Variable Cost = 80 Tickets * $10/Ticket

25. Solving for Breakeven $Price
Revenue - Variable Cost - Fixed Cost = Profit $Price/Tkt(80 Tkts) - $10/Tkt(80 Tkts) - $2000 = $0 $Price(80) - $10(80) - $2000 = $0 $Price(80) - $800 - $2000 = $0 $Price(80) - $2800 = $0 $Price(80) = $2800 $Price = $2800/80 $Price =$35
Show Slide #25: Solving for Breakeven $Price
Facilitator’s Note: Facilitate discussion using the slide)
This slide presents the algebraic solution. The Facilitator may wish to work through the solution first, or direct the Learners to the 9.2 Sensitivity Analysis Spreadsheet. This spreadsheet is designed to solve for a variety of variables in the breakeven equation, not just number of units, which was all that the 9.1 Breakeven Analysis Spreadsheet was designed to do. The most important question the Learner will have to ask prior to using the spreadsheet tool is, “What is my unknown?” Then, select the appropriate tab and enter the data into the spreadsheet, which will solve for the unknown.
First step is setting up the equation..

26. Solving for Breakeven $Price (Cont.)
Revenue - Variable Cost - Fixed Cost = Profit $Price/Tkt(80 Tkts) - $10/Tkt(80 Tkts) - $2000 = $0 $Price(80) - $10(80) - $2000 = $0 $Price(80) - $800 - $2000 = $0 $Price(80) - $2800 = $0 $Price(80) = $2800 $Price = $2800/80 $Price =$35
Show Slide #26: Solving for Breakeven $Price
Facilitator’s Note: Facilitate discussion using the slide)
Second step: cancel “tickets” from the revenue and variable cost expressions.

27. Solving for Breakeven $Price (Cont.)
Revenue - Variable Cost - Fixed Cost = Profit $Price/Tkt(80 Tkts) - $10/Tkt(80 Tkts) - $2000 = $0 $Price(80) - $10(80) - $2000 = $0 $Price(80) - $800 - $2000 = $0 $Price(80) - $2800 = $0 $Price(80) = $2800 $Price = $2800/80 $Price =$35
Show Slide #27: Solving for Breakeven $Price
Facilitator’s Note: Facilitate discussion using the slide)
Third Step: Perform basic math operations.
Multiply $10 * 80 = $800
Subtract 2000 from -800 = -2800

28. Solving for Breakeven $Price (Cont.)
Revenue - Variable Cost - Fixed Cost = Profit $Price/Tkt(80 Tkts) - $10/Tkt(80 Tkts) - $2000 = $0 $Price(80) - $10(80) - $2000 = $0 $Price(80) - $800 - $2000 = $0 $Price(80) - $2800 = $0 $Price(80) = $2800 $Price = $2800/80 $Price =$35
Show Slide #28: Solving for Breakeven $Price
Facilitator’s Note: Facilitate discussion using the slide)
Fourth Step: Add $2800 to both sides of the equation

29. Solving for Breakeven $Price (Cont.)
Revenue - Variable Cost - Fixed Cost = Profit $Price/Tkt(80 Tkts) - $10/Tkt(80 Tkts) - $2000 = $0 $Price(80) - $10(80) - $2000 = $0 $Price(80) - $800 - $2000 = $0 $Price(80) - $2800 = $0 $Price(80) = $2800 $Price = $2800/80 $Price =$35
Show Slide #29: Solving for Breakeven $Price
Facilitator’s Note: Facilitate discussion using the slide
Fifth Step: Divide both sides by 80 to yield the breakeven ticket price of $35

30. Proof Facilitator’s Note: Facilitate discussion using the slide)
$Price/Tkt(80 Tkts) - $10/Tkt(80 Tkts) - $2000 = $0 $35/Tkt(80 Tkts) - $10/Tkt(80 Tkts) - $2000 = $0 $2,800 -$800 - $2000=0
Show Slide #30: Proof
Facilitator’s Note: Facilitate discussion using the slide)
Prove the solution by plugging back into the original equation.

31. Graphic Solution – 80 Tickets
VC = 80 tickets * $10/ticket
FC = $2000
Total Cost = $2800 $
Show Slide #31: Graphic Solution – 80 Tickets
Facilitator’s Note: Facilitate discussion using the slide)
Note that on the graph the variable cost (reds dotted line) is now a horizontal line rather than an upward sloping line. That is because VC = #units*VC/Unit. Since number of units is known (80) and VC/Unit is known ($10) variable cost is a constant. In other words, a change in ticket price has no effect on total variable cost.
Fixed cost is represented by the green dotted line. It is horizontal because fixed cost doesn’t change at all when unit selling price changes.
Total Cost (purple line) is still VC + FC. Since both FC and VC are constant in this situation, the total cost is represented by a horizontal line. The breakeven point for selling price is still at the point where revenue = total cost.
Revenue (blue line) is $Price/unit * #Units. Here it is represented by an upward sloping line but the unknown variable is ticket price, not number of units. Number of units is constant at 80. As $Price/unit increases, revenue increases. Any price above $35 will result in profit, and price below $35 will result in loss, assuming that exactly 80 tickets are sold.
X Axis = Unknown Price per Ticket
Revenue increases as ticket price increases
$35

32. Interpreting the Result
In order to breakeven at a volume of 80 tickets, we must charge $35 per ticket.
Questions to ask:
Is the new price reasonable?
Can we sell all 80 tickets for $35/ticket?
What other factors might be considered?
Show Slide #32: Interpreting the Result
Facilitator’s Note: Facilitate discussion using the slide)
The “reasonableness” factor is the test of the assumptions. If we cannot sell the tickets for at least $35 we will be in a loss situation. That does not necessarily mean we do not go forward with the course of action. There may be other qualitative benefits to be achieved. Or, if the fixed costs are unavoidable, we are at least recovering some of them because ticket price is greater than the variable cost, so the contribution margin is positive.
Other factors to consider might be whether having the house packed to capacity impacts the quality of the diners’ experience in any way (Noise? Crowding? Delays in service?)

33. LSA #4 Check on Learning
Q1. When number of units is known, how will variable cost be expressed in the breakeven equation? A1. As the product of two constants, number of units and variable cost per unit. Therefore it will be a constant. Q1. What does the horizontal (x) axis represent on the graph? A2. The x axis represents the unknown variable. . In the graph we just showed, it represented the unknown price per unit.
Show Slide #33: LSA #4 Check on Learning
Facilitator’s Note: Ask the following Questions; (Facilitate discussion on answers given)
Q1. When number of units is known, how will variable cost be expressed in the breakeven equation?
A1. As the product of two constants, number of units and variable cost per unit. Therefore it will be a constant.
Q2. What does the horizontal (x) axis represent on the graph?
A2. The x axis represents the unknown variable. . In the graph we just showed, it represented the unknown price per unit.

34. LSA #4 Summary Show Slide #34: LSA #4 Summary
Facilitator Read: During this LSA we discussed:
Calculate breakeven selling price for a given sales quantity
Sensitivity and Breakeven
Solving for Breakeven $Price

35. What Ifs Involving Other Variables
What if the market will not bear an increase in ticket price above $30?
AND Fixed Cost increases by 10%?
Task: Calculate the target variable cost per ticket that will maintain a breakeven of 100 tickets
How would you set up the equation?
What is the unknown variable?
How would you express Revenue? Variable Cost?
Show Slide #35: What Ifs Involving Other Variables
5. Learning Step/Activity #5. Solve for missing variables in the breakeven equation given changed assumptions
Method of Instruction: DSL (large or small group discussion)
Facilitator to Learner Ratio: 2:25
Time of Instruction: 15 minutes
Media: Slides, Printed Reference Materials
Facilitator’s Note: Facilitate discussion using the slide)
The Facilitator will make sure the Learners can properly set up the equation and then refer to the 9.2 Sensitivity analysis spreadsheet to finish solving the problem. This keeps the Learners from being caught up in the algebra and focuses them instead on the analytical parts of the problem, most importantly, How will the result of the calculation affect my decisions?
What if the market will not bear an increase in ticket price above $30 AND Fixed Cost increases by 10%?
Task: Calculate the target variable cost per ticket that will maintain a breakeven of 100 tickets
How would you set up the equation? By now we should know that we are using the breakeven equation Rev – VC – FC = Profit
What is the unknown variable? The unknown is Variable Cost per ticket.
The known variables are price per ticket ($30), number of tickets (100), fixed cost ($ % of $2000), and target profit ($0).
How would you express Revenue and Variable Cost?
Revenue = $30/ticket * 100 tickets
VC = Unknown VC$/ticket * 100 tickets

36. Solving for Breakeven $VC/Ticket
Revenue - Variable Cost - Fixed Cost = Profit
$30/Tkt(100 Tkts) - $VC/Tkt(100 Tkts) - $2000(1+.1) = $0
$30(100) - $VC(100) - $2000(1+.1) = $0
$30(100) - $VC(100) - $2200 = $0
$ $VC(100) - $2200 = $0
$800 - $VC(100) = $0
- $VC(100) = - $800
$VC = - $800/-100
$VC = $8
Show Slide #36: Solving for Breakeven $VC/Ticket
Facilitator’s Note: Facilitate discussion using the slide)
The equation should be set up like this. If you can set up the equation correctly we will assume you can solve it.

37. Solving for Breakeven $VC/Ticket (Cont.)
Revenue - Variable Cost - Fixed Cost = Profit
$30/Tkt(100 Tkts) - $VC/Tkt(100 Tkts) - $2000(1+.1) = $0
$30(100) - $VC(100) - $2000(1+.1) = $0
$30(100) - $VC(100) - $2200 = $0
$ $VC(100) - $2200 = $0
$800 - $VC(100) = $0
- $VC(100) = - $800
$VC = - $800/-100
$VC = $8
Show Slide #37: Solving for Breakeven $VC/Ticket
Facilitator’s Note: Facilitate discussion using the slide)
This slide presents the algebraic solution.
As you can see, a VC per ticket of $8 will permit the theater to still breakeven at a quantity of 100 tickets without having to increase the price above $30.
Note: Don’t take too much time to solve the equation in class, because you are going to introduce the spreadsheet. As long as the Learners have the equation written correctly, they should be able to trust the solution by proving it on the next slide.

38. Proof Facilitator’s Note: Facilitate discussion using the slide)
Revenue - Variable Cost - Fixed Cost = Profit
$30/Tkt(100 Tkts) - $VC/Tkt(100 Tkts) - $2000(1+.1) = $0
$30/Tkt(100 Tkts) - $8/Tkt(100 Tkts) - $2000(1+.1) = $0
$ $800 - $2200=0
Show Slide #38: Proof
Facilitator’s Note: Facilitate discussion using the slide)
This slide presents the proof, plugging the solution into the original equation.

39. Graphic Solution – 100 Tickets
Revenue = 100 tickets * $30/ticket
Show Slide #39: Graphic Solution – 100 Tickets
Facilitator’s Note: Facilitate discussion using the slide)
Notice that Revenue (blue line) is now a horizontal line rather than an upward sloping line. That is because Revenue = $Price/unit*#Units. Since number of units is now known (100) and the selling price is also known ($30) Revenue becomes a constant.
Variable cost is an upward sloping line. (Red dotted line.) VC = $VC/unit * #Units. While the number of units is known (100) the $VC/unit is unknown. The x axis represents the unknown variable cost per unit. Total variable cost increases as $VC/unit increases.
Total cost (purple line) is the sum of Fixed and Variable cost. The breakeven variable cost is the point at which Total cost = Revenue. Variable costs of less than $8/unit will result in profit, represented by the green area on the graph. Variable costs of greater than $8/unit will result in a loss, represented by the red area above the revenue line. $8
X Axis = Variable Cost per Ticket
Total cost increases as variable cost per ticket increases

40. Interpreting the Result
In order to maintain the breakeven point of 100 tickets, we need to reduce variable cost per ticket from $10 to $8.
Questions to ask:
How can we achieve this reduction?
Is this reasonable?
What other factors should be considered?
Show Slide #40: Interpreting the Result
Facilitator’s Note: Facilitate discussion using the slide)
Since the variable cost in this case is food, the only way to reduce variable cost is to reduce the cost of food. The options would seem to be to reduce portion or quality.

41. Sensitivity Analysis Spreadsheet
Select the “Solve Breakeven VC” Tab
Show Slide #41: Sensitivity Analysis Spreadsheet
Facilitator’s Note: Facilitate discussion using the slide)
Note: The diskette button should be a live link to the spreadsheet. The Facilitator may want to demonstrate directly using the spreadsheet on the screen, or scroll through VGs #41-43 to show the results.]
It’s very important to ask what is the unknown variable. The options available are quantity, price, variable cost, and fixed cost. There’s also a tab for sales mix which will be used later. Select the “Solve Breakeven VC” Tab.

42. Sensitivity Analysis Spreadsheet (Cont.)
Show Slide #42: Sensitivity Analysis Spreadsheet
Facilitator’s Note: Facilitate discussion using the slide)
Once you are on the breakeven variable cost tab, you can mouse over the question mark for help.
Help messages appear when you mouse over the question marks

43. Sensitivity Analysis Spreadsheet (Cont.)
Enter problem data into the white cells:
# units = 100
$price/unit = $30
Fixed Cost = $2000 +$200
Profit Target = $0
(default value)
Show Slide #43: Sensitivity Analysis Spreadsheet
Facilitator’s Note: Facilitate discussion using the slide)
Enter the problem data into the appropriate spreadsheet cells. Only the white cells can accept data. The spreadsheet will calculate breakeven variable cost per unit automatically.
The spreadsheet automatically calculates the unknown VC$/Unit

44. What If’s Involving Other Variables
What if the market will not bear an increase in ticket price above $30?
Variable cost increases by 30%
Task: Calculate target fixed cost that will maintain a breakeven point of 100 tickets
What is the unknown variable?
Which spreadsheet tool will I use?
How would I set up the equation?
Show Slide #44: What Ifs Involving Other Variables
Facilitator’s Note: Facilitate discussion using the slide)
Here is another what-if scenario. The difference between this one and the last one is that, instead of fixed cost increasing, variable cost is increasing and we are going to solve for the fixed cost that will permit us to maintain our price at $30/ticket and our breakeven quantity at 100 tickets.
What is the unknown variable? The unknown is fixed cost. The knowns are price per unit ($30), number of units (100), and variable cost per unit ($ % of $10 = $13).
Which spreadsheet tool will I use? Since the unknown is Fixed Cost, choose the tab for “Solve Breakeven FC”
How would I set up the equation? Using the basic breakeven equation, the equation should be:
Advance slide

45. Solving for Breakeven $Fixed Cost
Revenue - Variable Cost - Fixed Cost = Profit
$30/Tkt(100 Tkts) - $10/Tkt(1+.3)(100 Tkts) - $FC = $0
$30(100) - $10(1+.3)(100) - $FC = $0
$30(100) - $13(100) - $FC = $0
$ $ $FC = $0
$ $FC = $0
$FC = $1700
Show Slide #45: Solving for Breakeven $Fixed Cost
Facilitator’s Note: Facilitate discussion using the slide)
$30/Tkt(100 Tkts) - $10/Tkt(1+.3)(100 Tkts) - $FC = $0
If you can set up the equation, we assume you can solve it. But just in case, here is the solution.
Advance slide

46. Solving for Breakeven $Fixed Cost (Cont.)
Revenue - Variable Cost - Fixed Cost = Profit
$30/Tkt(100 Tkts) - $10/Tkt(1+.3)(100 Tkts) - $FC = $0
$30(100) - $10(1+.3)(100) - $FC = $0
$30(100) - $13(100) - $FC = $0
$ $ $FC = $0
$ $FC = $0
$FC = $1700
Show Slide #46: Solving for Breakeven $Fixed Cost
Facilitator’s Note: Facilitate discussion using the slide)
This slide presents the algebraic solution.
The solution is $ That is, Fixed cost must be reduced to $1700 in order to maintain the price of $30 and quantity at 100 if variable cost increases to $13 per unit.

47. Proof Facilitator’s Note: Facilitate discussion using the slide)
Revenue - Variable Cost - Fixed Cost = Profit
$30/Tkt(100 Tkts) - $10/Tkt(1+.3)(100 Tkts) - $FC = $0
$30/Tkt(100 Tkts) - $10/Tkt(1+.3)(100 Tkts) -$1700 = $0
$30(100) - $10(1.3)(100) -$1700 = $0
$ $13(100) -$1700 = $0
$ $1300 -$1700 = $0
Show Slide #47: Proof
Facilitator’s Note: Facilitate discussion using the slide)
This slide illustrates the proof if you plug $1700 back into the equation for Fixed Cost.

48. Graphic Solution – 100 Tickets
VC = 100 tickets * $13/ticket
Revenue = 100 tickets * $30/tkt $
Show Slide #48: Graphic Solution – 100 Tickets
Facilitator’s Note: Facilitate discussion using the slide)
Here is the graph of the scenario. Note that the x-axis represents the unknown fixed cost.
Revenue (blue line) and variable cost (red dotted line) are both shown as horizontal lines since both the number of units (100) and the unit price and variable cost are known.
Fixed cost (green dotted line) which is unknown in this case, is shown as an upward sloping line. Both fixed cost and total cost increase as fixed cost increases.
Total cost (purple line) = FC + VC. The point at which TC = Revenue is the breakeven point. Any Fixed cost greater than $1700 results in a loss (red area). Any fixed cost less than $1700 results in profit (green area.)
X Axis = Unknown Fixed Cost
Total cost increases as Fixed Cost increases
$1700

49. Interpreting the Result
In order to maintain the breakeven point of 100 tickets, we need to reduce fixed cost from $2000 to $1700.
Questions to ask:
How can we achieve this reduction?
Is this reasonable?
What other factors should be considered?
Show Slide #49: Interpreting the Result
Facilitator’s Note: Facilitate discussion using the slide
Questions to ask:
How can we achieve this reduction? The fixed costs include the staff (actor/servers, stage crew and kitchen crew) and the facilities. Management needs to ask where cuts might be made to achieve the reduction. We don’t know the answer, but this analysis helps us ask the right questions.
Are those reasonable? Once again, it’s important to ask if the types of cuts are even possible.
What other factors should be considered? Would making those changes affect the quality of the experience for diners? Would they still be willing to pay the $30 price?

50. Sensitivity Analysis Spreadsheet
Your spreadsheet should look like this
Show Slide #50: Sensitivity Analysis Spreadsheet
Facilitator’s Note: Facilitate discussion using the slide
Your spreadsheet should look like this

51. Sensitivity Analysis Spreadsheet (Cont.)
Your graph should look like this
Show Slide #51: Sensitivity Analysis Spreadsheet
Facilitator’s Note: Facilitate discussion using the slide
Your graph should look like this

52. LSA #5 Check on Learning
Q1. When using the Sensitivity Analysis Spreadsheet, what is the first question we should ask? A1. What is the unknown variable? That will help us to know which spreadsheet tool/tab to use. Q2.Once we have found the solution to the unknown variable, what questions should we ask? A2. Is this reasonable? And, What other factors should be considered?
Show Slide #52: LSA#5 Check on Learning
Facilitator’s Note: Ask the following Questions; (Facilitate discussion on answers given)
Q1. When using the Sensitivity Analysis Spreadsheet, what is the first question we should ask?
A1. What is the unknown variable? That will help us to know which spreadsheet tool/tab to use.
Q2. Once we have found the solution to the unknown variable, what questions should we ask?
A2. Is this reasonable? And, What other factors should be considered?

53. LSA #5 Summary Show Slide #53: LSA #5 Summary
Facilitator Read: During this LSA we discussed:
Solve for missing variables in the breakeven equation given changed assumptions
Sensitivity Analysis Spreadsheet

54. Sales Mix Issues
Remember our key assumptions!
What if an entity sells more than one product?
Breakeven analysis is based on the Sales Mix
What percentage of the Total Sales in units does each product comprise?
Show Slide #54: Sales Mix Issues
6. Learning Step/Activity #6. Identify and enter relevant scenario data into macro enabled templates to calculate Sales Mix Breakeven
Method of Instruction: DSL (large or small group discussion)
Facilitator to Learner Ratio: 2:25
Time of Instruction: 10 minutes
Media: Slides, Printed Reference Materials
Facilitator’s Note: Facilitate discussion using the slide
Remember our key assumptions! [Note: Learners should be able to name them]
Variable cost is linear on a per-unit basis, AND
The entity sells only one product. This assumption is a bit of a stretch, since most entities have more than one product or product line.
What if an entity sells more than one product? This is a reasonable assumption. However, as we stated earlier, it can complicate the breakeven analysis by introducing multiple variables into the equation.
Breakeven analysis is based on the Sales Mix. We can still rather simply calculate breakeven in units if we make some assumptions about the Sales Mix
What percentage of the Total Sales in units does each product comprise? Sales mix refers to the percentage of the total number of units sold for each product sold. For example, if we sell two products, is the mix 50-50? ? ?

55. Sales Mix Example
Sebastian’s Dinner Theater offers a Senior Discount in addition to regular price
Senior price is $20 per ticket
Seniors receive a reduced food portion
Variable cost = $7 per ticket.
Sales Mix is 30% Senior and 70% Regular
Regular price is $30 and Variable Cost is $10/ticket
Fixed costs = $2000.
Task: Calculate the breakeven number of tickets
Show Slide 55: Sales Mix Example
Facilitator’s Note: Facilitate discussion using the slide
Sebastian’s has two products: a Senior price ticket and a regular price ticket.
The senior price ticket sells for $20 and the variable cost (food) is $7 per ticket.
The regular price ticket sells for $30 and the variable cost (food) is $10 per ticket.
Assuming that 30% of tickets sold are senior tickets and 70% are regular price, what is the breakeven number of tickets?
Note: The percentages of sales mix MUST add up to 100%.

56. percentage1 * price1 + percentage2 * price2
Sales Mix
Calculate Weighted Average $Price/Ticket:
percentage1 * price1 + percentage2 * price2
30%*$ %*$30 = $6 + $21 = $27
percentage1 and price1 represent Senior tickets
percentage2 and price2 represent Regular tickets
Show Slide 56: Sales Mix
Facilitator’s Note: Facilitate discussion using the slide
Weighted average price per ticket = percentage1 * price1 + percentage2 * price2
Yields a weighted average price of $27

57. percentage1 * VC1 + percentage2 * VC2
Sales Mix
Calculate Weighted Average $VC/Ticket:
percentage1 * VC1 + percentage2 * VC2
30%*$7 + 70%*$10 = $ $7 = $9.10
percentage1 and VC1 represent Senior tickets
percentage2 and VC2 represent Regular tickets
Show Slide 57: Sales Mix
Facilitator’s Note: Facilitate discussion using the slide
Weighted average price per ticket = percentage1 * VC1 + percentage2 * VC2
Yields a weighted average variable cost of $9.10 per unit.

58. Sales Mix What is the weighted average Contribution Margin per unit?
$CM/Ticket = $Price/Ticket - $VC/Ticket
$27/Ticket - $9.10/Ticket = $17.90/Ticket
For each Ticket sold, profit will increase by an average of $17.90
Show Slide 58: Sales Mix
Facilitator’s Note: Facilitate discussion using the slide
Weighted average price per ticket = percentage1 * VC1 + percentage2 * VC2
Yields a weighted average variable cost of $9.10 per unit.

59. Sales Mix
Use the Sales Mix tab on the 9.2 Sensitivity Analysis spreadsheet to calculate:
Weighted average price
Weighted average variable cost per unit
Weighted Average contribution margin
Breakeven point
Show Slide 59: Sales Mix
Facilitator’s Note: Facilitate discussion using the slide
Use the Breakeven spreadsheet or the equation.
Equation:
Revenue – Variable Cost – Fixed Cost = 0
$27/tkt*#tkts - $9.10/tkt*#tkts – $2000 = 0
($27-$9.10)/tkt*#tkts – $2000 = 0
$17.90/tkt*#tkts – $2000 = 0
$17.90*# - $2000 = 0
$17.90 *# = $2000
# = $2000/$17.90
# = approximately 112 tickets
Of the 112 tickets, 30% or approximately 34 will be senior tickets
70% or approximately 78 will be regular.
To prove the calculation:
(34 Senior tkts * Senior $price/tkt + 78 Reg. tkts * Reg $price/tkt) - (34 Senior tkts * Senior $VC/tkt + 78 Reg. tkts * Reg $VC/tkt) -$2000 = $Profit
(34 Senior tkts * $20/tkt + 78 Reg. tkts * $30/tkt) - (34 Senior tkts * $7/tkt + 78 Reg. tkts * $10/tkt) -$2000 = $Profit
(34*$ *$30) – (34*$7 + 78*$10) – $2000 = $profit
($ $2340) – ($238 + $780) – $2000 = $profit
$3020 – $1018 – $2000 = $2 (rounding error)

60. Sensitivity Analysis Spreadsheet
Enter the percentage for each product
The spreadsheet will verify that the total equals 100%
Show Slide 60: Sensitivity Analysis Spreadsheet
Facilitator’s Note: Facilitate discussion using the slide
Slides #59-61 step through the process of entering the problem data into the Sales Mix tab on the Sensitivity Analysis spreadsheet. The Facilitator may choose to directly demonstrate the spreadsheet, or use the screenshots on these slides.]
Enter the percentage for each product
The spreadsheet will verify that the total equals 100%

61. Sensitivity Analysis Spreadsheet
Enter price per unit and variable cost per unit for each product
Show Slide 61: Sensitivity Analysis Spreadsheet
Facilitator’s Note: Facilitate discussion using the slide
Enter price per unit and variable cost per unit for each product. The spreadsheet calculates CM per unit for each product, and weighted average selling price, variable cost, and contribution margin
The spreadsheet calculates CM per unit for each product, and weighted average selling price, variable cost, and contribution margin

62. Sensitivity Analysis Spreadsheet
The spreadsheet calculates the quantity of each type of product and the total number of units that must be sold to breakeven
Enter the Fixed Cost
Show Slide 62: Sensitivity Analysis Spreadsheet
Facilitator’s Note: Facilitate discussion using the slide
Enter the Fixed Cost. The spreadsheet calculates the quantity of each type of product and the total number of units that must be sold to breakeven

63. Breakeven Theory
If: Contribution Margin = Revenue – Variable Cost And the breakeven equation is: Revenue – Variable Cost – Fixed Cost = 0 Or Contribution Margin – Fixed Cost = 0 Then breakeven occurs when: Contribution Margin = Fixed Cost
Show Slide 63: Breakeven Theory
Facilitator’s Note: Facilitate discussion using the slide
If:
Contribution Margin = Revenue – Variable Cost
And the breakeven equation is:
Revenue – Variable Cost – Fixed Cost = 0 Or
Contribution Margin – Fixed Cost = 0
Then breakeven occurs when:
Contribution Margin = Fixed Cost
This is just an algebraic manipulation of the equation to show another view of breakeven – that is, that at breakeven point, Contribution Margin is equal to fixed cost. This view of breakeven will help us to understand the graphic view on the Sales mix tab of the spreadsheet.

64. Graphic Illustration Show Slide 64: Graphic Illustration
Facilitator’s Note: Facilitate discussion using the slide
The x axis represents number of tickets sold. The red line represents fixed costs of $ The blue line represents the weighted average contribution margin. As number of tickets sold increases, the total contribution margin increases. The point at which the fixed cost and average contribution margin are equal is the breakeven point of 112 units. At any quantity less than 112 units there will be a loss, at any quantity greater than 112 units, provided the sales mix holds, there will be profit.
The dotted green line represents the CM/unit of the regular ticket. The yellow dotted line represents the CM/unit of the senior ticket. The weighted average falls in between, but is closer to the regular CM line because Regular tickets represent a higher percentage of the sales mix than Senior tickets.

65. What if?
How would the breakeven point change if the actual sales mix was 40% Senior and 60% Regular? 50/50?
What else might Sebastian’s management consider in this decision?
Show Slide 65: What if?
Facilitator’s Note: Facilitate discussion using the slide
Use the 9.2 Sensitivity Spreadsheet to calculate the new weighted average price per ticket and variable cost per ticket. Then calculate the new breakeven point.
How do the results change?
Since the Senior ticket has a lower contribution margin per ticket, as the percentage of senior tickets increases, the weighted average contribution margin per ticket decreases, and the breakeven point in units must increase.
If the sales mix is then the new CM/unit is $17.20 and the breakeven is 116 tickets
If the sales mix is then the new CM/unit is $16.50 and the breakeven is 121 tickets
What else might management consider?
They should consider if offering the senior price will cut into regular-priced business. Some seniors might have been willing to pay full price.

66. LSA #6 Check on Learning
Q1. What is the first step when calculating breakeven for an entity that sells more than one product? A1. The first step is to calculate the weighted average selling price, followed by calculating the weighted average variable cost and weighted average contribution margin.
Show Slide #66: LSA #5 Check on Learning
Facilitator’s Note: Ask the following Questions; (Facilitate discussion on answers given)
Q1. What is the first step when calculating breakeven for an entity that sells more than one product?
A1. The first step is to calculate the weighted average selling price, followed by calculating the weighted average variable cost and weighted average contribution margin.

67. LSA #6 Summary Show Slide #67: LSA #6 Summary
Facilitator Read: During this LSA we discussed:
Identify and enter relevant scenario data into macro enabled templates to calculate Sales Mix Breakeven
Sales Mix
Breakeven Theory
Sensitivity Analysis Spreadsheet

68. TLO Check on Learning Show Slide #68: TLO Check on Learning
Facilitator’s Note: Facilitator, have each group as a group write down one question from this lesson, give about five minutes. Once all groups have their question written, pass it to another group to answer it. Facilitate a discussion on each question.

69. TLO Summary Action: Identify Sensitive Variables
Condition: FM Leaders in a classroom environment working as a member of a small group, using doctrinal and administrative publications, self-study exercises, personal experiences, practical exercises, handouts, and discussion.
Standard: With at least 80% accuracy, you must:
Review the key variables and assumptions in the Breakeven Equation
Define “sensitive variables”
Breakeven Analysis Spreadsheet, Calculate the new breakeven point using each changed assumption
Calculate breakeven selling price for a given sales quantity
Solve for missing variables in the breakeven equation given changed assumptions
Identify and enter relevant scenario data into macro enabled templates to calculate Sales Mix Breakeven
Show Slide #69: TLO Summary
Action: Identify Sensitive Variables
Condition: FM Leaders in a classroom environment working as a member of a small group, using doctrinal and administrative publications, self-study exercises, personal experiences, practical exercises, handouts, and discussion.
Standard: With at least 80% accuracy, you must:
Review the key variables and assumptions in the Breakeven Equation
Define “sensitive variables”
Breakeven Analysis Spreadsheet, Calculate the new breakeven point using each changed assumption
Calculate breakeven selling price for a given sales quantity
Solve for missing variables in the breakeven equation given changed assumptions
Identify and enter relevant scenario data into macro enabled templates to calculate Sales Mix Breakeven
- Or -
Facilitator at this time, have one Learner from each group to explain the most important take away to them from this lesson. Facilitate a discussion on each answer.

70. Practical Exercises Show Slide #70: Practical Exercises
Facilitator’s Note: At this time have learners log onto Black board and use the excel spreadsheet to record all their work.