1372989
Break-even
Point
- Revenue = Number
of sales x Price
- TC = FC + VC
- Profit + TR> TC
- Loss = TR < TC
- Break - even point = FIXED
COSTS/ SELLING PRICE -
VARIABLE COSTS (contribution)
- Working out contribution
- Selling price - variable costs
- Work out how many units
need selling to pay FC and
breakeven
- Fixed Costs/Contribution = No of units.
- Fixed Costs/Contribution = No of units.
- Selling price - variable costs
- Impact of changes on a business
- Increase in FC/VC causes BEP to increase
- Decrease in FC/VC causes BEP to decrease
- Increase in Selling price
causes BEP to decrease
- Decrease in Selling price
causes BEP to Increase
- Increase in FC/VC causes BEP to increase
- When FC change
- Rent Increase:
- Increase staff salaries
- Insurance increase
- Increase staff salaries
- Rent Increase:
- Change in VC
- Supplier may increase goods
- Wasting materials due to faulty goods
- Increased VAt
- Staff wage increase
- Paying overtime
- Supplier may increase goods
- When Selling Prices change
- A
competitor
has a big
promotion
and take
your
customers
- Not selling
products because
they're too
expensive
- A
competitor
has a big
promotion
and take
your
customers
- Drawing BE charts
- Involve drawing three lines
- Fixed costs
- Total costs
- Total revenue
- Fixed costs
- Involve drawing three lines
- Margin of safety
- Actual sales -
Break-even
output= margin of
safety
- Actual sales -
Break-even
output= margin of
safety
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