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  3. Financial Forecasting in Python

Exercise

Calculating the break-even point

Tracking and understanding how cost per unit varies by month is critical, as the COGS influence the gross profit. At a certain point, if we do not make enough sales in the month to cover our costs, we will enter a loss situation.

How do we know we have produced enough units to sell to cover our costs? We do this by using a concept called the break-even point. The formula is as follows:

\(Breakeven\,Point(Units) = \frac{Fixed\,Costs}{Price\,Per\,Unit-Variable\,Cost\,Per\,Unit}\)

  • In the last exercise, we calculated a unit cost of 16.5 USD for January and 15.2 USD for February. Keep this in mind when calculating the break-even point.

Predefined variables have been printed to the shell.

Instructions

100 XP
  • Print the variables in the shell to help you construct the formula for the break-even point.
  • Forecast the gross profit for January and February.