Break-even

Break-even

1. fixed costs are costs that stay the same and are not affected by the businesses output

   • Rent
   • TAX
   • Advertisement
   • Insurance
   • Salaries

2. Variable costs are costs that are affected by the businesses output

   • Wages
   • Raw materials
   • Bills

3. Break-even analysis shows the point at which the business should expect a profit

   • FC+V=TC
   • FC/V-SP
   • Rev= S*SP
   • Benefits of using break-even analysis is that it gives the business a clear idea of what they need to do to survive
   • Limitations of using break-even analysis is that it makes calculations presuming that all products will be sold

4. Table and chart method is the method that you fill in the table using multiple calculations and then using the information you have gathered to make a chart which can indicate and show many things

   • X axis = output
   • Y axis = costs

5. ICT/spreadsheets help when calculating break-even analysis because they are accurate and fast