Organizations use breakeven analysis and the multiple variations of the breakeven analysis tool to forecast the number of products or services they will have to produce, sell or break even financially. After the breakeven point, all services and products made and sold are profit. Therefore, profits can be forecast with this tool as well.
In this assignment you will use the excel data analysis tool known as Goal Seek. Read the example in Chapter 1 on Nolin Plastics to make yourself familiar with the company’s situation. Remember: You are not required to build any formulas since they are all embedded in the Excel spreadsheet. Simply follow the steps located in the excel file embedded here and complete the following analysis actionsPreview the document:
Given fixed costs of $3,000, variable costs of $2.00 and a selling price of $6.00, what is the production volume required for breakeven – a $0 profit/loss?
Given fixed costs of $3,000, variable costs of $2.00 and a selling price of $10.00, what is the production volume required for a $2,000 profit?
Provide a brief narrative on your breakeven analyses and describe the importance of the use of this tool for business and industry. Insert this narrative as a text box in the excel file.
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