Break-Even Analysis ©Cengage Learning. Not for commercial use.

Enter data only in yellow cells.

Profitability Analysis
Quantity 10,000

Cost
Fixed cost $100,000.00
Unit cost $12.00

Revenue
Unit revenue $20.00

Total Cost $220,000.00

Total Revenue $200,000.00
Net Profit -$20,000.00
Profit or Loss Loss
earning. Not for commercial use.

Outsourcing Decision
Quantity 8,500

Produce In-House
Fixed cost $305,000.00
Unit cost $32.00

Outsource
Fixed cost
Unit cost $82.00

Total In-House Production Cost $577,000.00

Total Outsourced Cost $697,000.00
Cost difference (In-House - Outsourced) -$120,000.00
Economical Decision In-House
Technology Choice Decision
Quantity 100,000

Option A
Fixed cost $800,000.00
Unit cost $19.00

Option B
Fixed cost $1,250,000.00
Unit cost $14.00

Total Cost Option A $2,700,000.00

Total Cost Option B $2,650,000.00
Cost difference (Option A - Option B) $50,000.00
Economical Decision Option B