Part 2. MM4XL Tools > 2. Analytical Tools > Business Formulas > mmBEPR, Break-Even Point with Fixed Rate of Return

Business Formulas

mmBEPR, Break-Even Point with Fixed Rate of Return

Category: Reporting > Finance

The simplest kind of break-even analysis does not explicitly incorporate the organization's profit motive. However, the objective of the business enterprise is not simply breaking even, but making a profit. The break-even point for minimum acceptable return is reached when a sufficient quantity is sold so that the gross profit minus the minimum acceptable return is sufficient to recoup the fixed costs.

Business analysis formulas for Excel. Marketing tool for professionals

Where:

FC = Fixed, or facility, costs. Expenses not dependent on the level of goods or services produced.
P = Price
VC = Variable costs. Expenses that change proportionally to the size of production.
R = Percentage rate of return

Syntax

mmBEPR(Price, Variable_Cost, Fix_Cost, Commission, Optional Do_Value)

Price The product price
Variable_Cost The product variable costs (the cost of production materials)
Fix_Cost The facility costs (like rent, wages, etc. assigned to the product)
Commission Percent value for minimum return
Do_Value Optional - TRUE returns BEPR in value, FALSE returns BEPR in volume

Example

See example file Business Formulas.xls, sheet mmBEPR.

Business analysis formulas for Excel. Marketing tool for professionals

Related functions
  • mmBEP
  • mmDBAVG
  • mmDBCOUNT
  • mmDBSUM
  • mmPREMIUM
  • mmREBUY
  • mmREBUYS
  • mmBDI
  • mmCDI
  • mmMOI
  • mmPRESS
  • Price Indices
Related MM4XL software tools
  • BCG Matrix
  • Variation Analyst
Source
William R. King, 1967, Quantitative Analysis for Marketing Management
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