breakeven

breakeven

Fixed costs
1. fixed costs do not change with output
  1. Examples: salary
    1. insurance
      1. tax
        advertising
  2. how ICT spreadsheet help business with break even
    1. if you need to add something the computer will add it for you
variable cost
1. costs that change with output
  1. example:wages
    1. raw marterials
breakeven analysis
1. also given to work out profit
2. it show how many products company need to sell to make profit
3. it can be used to calculate the sales needed to make a profit at any given price
4. business use it to find break even point when they want to make a change in price
Table and Chart
1. step 1 complete the table
  1. step 2 plot fixed costs
    1. step 3 plot variable costs
      1. step 4 plot total costs
        step 5 plot sales
revenue
1. total revenue
  1. number of sales x selling price
    1. total cost
      1. fixed cost + variable cost
      2. profit
        total revenue - total costs
2. this is now much the business makes
advantages and disadventages
1. sales needed to breakeven
  1. shows change of output
  2. it assumes all output
    1. plotting has to be accurate

Resource summary

	Created by Gold99Star about 10 years ago