Monday 19 January 2015

Revision - Understand how businesses plan for success - brake even point

Topic 3 (B.1) Understand the planning tools businesses use to predict when they will start making a profit

To answer all online questions on this topic learners should:

Be able to define break-even - the point that a business has made enough money through product sales to cover the costs of making the product (no profit and no loss)
Be able to interpret from a brake even chart: the 
  • break even point
  • profit
  • loss
  • variable costs
  • fixed costs
  • total revenue
  • total costs
  • margin of safety
Be able to calculate the break-even (formula will be given in the assessment)

Break-even     =                            fixed costs
                             selling price per unit - variable cost per unit

Be able to analyse and explain the value and importance of break even analysis to businesses when planning for success

Analyse and explain the associated risks to a business of not completing a break-even analysis

Present given information graphically on a break even chart

Analyse the effect on the break even point if sales or (fixed and variable) costs change, and explain the impact of these changes on the business

That's all you need to know for topic three.

Good luck and enjoy

No comments:

Post a Comment