break-even analysis I |
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Task 1
Refresher
Refresher
Questions
1. Jamie sells 12 bottles of sports drink for £2 each. Calculate her revenue.
2. Dawn bought a box of 20 eyeliners for £30 and sold them for £2 each.
a. Calculate her revenue
b Calculate her profit
3. If Sam Phone cases for £10 and buys them for £8, how many does he need to sell to make a profit of £20?
1. Jamie sells 12 bottles of sports drink for £2 each. Calculate her revenue.
2. Dawn bought a box of 20 eyeliners for £30 and sold them for £2 each.
a. Calculate her revenue
b Calculate her profit
3. If Sam Phone cases for £10 and buys them for £8, how many does he need to sell to make a profit of £20?
Stretch & challenge: Can you give an example of when you might hear this phrase? Why might this be relevant for business?
Information
A business can only make a profit when its sales revenue is greater than its costs. If revenue is less than costs, the firm will make a loss. Break-even is a level of production (or output) at which revenue from sales equals the total cost of production. In this situation a business will make neither a profit or a loss.
A business can only make a profit when its sales revenue is greater than its costs. If revenue is less than costs, the firm will make a loss. Break-even is a level of production (or output) at which revenue from sales equals the total cost of production. In this situation a business will make neither a profit or a loss.
Key terms
Break-even is the level of production at which a business's total costs and revenue from sales are equal.
Total Revenue = Total Costs
A break-even chart shows a business's costs and revenues and the level of production needed to break-even.
Break-even is the level of production at which a business's total costs and revenue from sales are equal.
Total Revenue = Total Costs
A break-even chart shows a business's costs and revenues and the level of production needed to break-even.
Task 3
Case study Gabriel is considering starting up a market stall selling pancakes. The stall costs £5 per hour to rent and each pancake will generate costs of £2. Gabriel plans to sell each pancake for £3. Use the grid provided to work out how many pancakes Gabriel will have to make per hour in order to break-even. |