Break even

Break even

fixed costs
1. This doesn't change with output
  1. examples - rent
    1. Salary
Variable costs
1. example - wages
  1. this does change with output
    1. advantages and disadvantages
      1. sales needed to break even
        advantages
        shows changes of output
        disadvantages
        it assumes all output
        the plotting of the points have to be accurate
  2. raw materials
break even analysis
1. it shows the point at which the business to start making profit
2. it can be used to calculate the sales needed to make a profit at any given price
3. a business finds the break even point when they want to make changes in price
4. also given to work out profit
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
        step 6 - when the lines (sales&total) cross this is the break even
        circle it and draw a line down to the number that it goes to
revenue
1. this is how much the business makes
2. total revenue
  1. formulas
    1. number of sales x selling price
    2. total cost
      1. fixed cost + variable costs
        how ICT spreadsheet help us with break even analysis
        if you need to add something the computar will change and do it for you
        a lot more accurate
        also is quicker as it will only take a few seconds
    3. profit
      1. total revenue - total costs

Resource summary

	Created by ellstar over 9 years ago