This spreadsheet shows how Excel can be important for the decision making process of a business. This kind of spreadsheet can be used for people which investigates the relationship between a product’s expenses (cost), its volume (units sold), and the operating income (gross profit) [cost-volume-profit (CVP) (also called break-even analysis)]. Any money a company earns above the break-even point is called operating income, or gross profit. By inserting the data and appropriate formulas in some of the cells you get the first table. Before inserting the formulas it will be easier to change all the cell names by the corresponding left cell. This is possible to do by clicking on the formulas tab on the ribbon and then clicking in the Defined Names box on Create From Selection (make sure that the dialog box left column is selected). Afterwards, you create a data table with the what-if analysis (here called the "Break-Even Analysis" table). From this table it is possible to determine (just read of the table) the revenues, expenses, and income for different amounts of units sold. From this table a manufacturor can conclude how many units he has to sell in order to get a (positive) income. That is why this table is called a Break-Even analysis because you can find out when the revenues will exceed the expenses (break-even). For the exercise click here.
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