break-even analysis II |
|
Task 2
Case study
Daisy owns a designer bag shop, they store overheads are £100 per hour. Daisy buys the bags for £30 each and her staff work on commission, earning £10 per bag they sell. The average cost of a bag is £60.
Case study
Daisy owns a designer bag shop, they store overheads are £100 per hour. Daisy buys the bags for £30 each and her staff work on commission, earning £10 per bag they sell. The average cost of a bag is £60.
Stretch & challenge: If Daisy's shops sells 10 bags per hour, what is the margin of safety (i.e. how many more units are sold than are required to break-even)?
Key term
The margin of safety (MOS) measure the amount by which a business's current level of production exceeds its break-even level of output.
A break-even chart shows a business's costs and revenues and level of production needed to break even.
The margin of safety (MOS) measure the amount by which a business's current level of production exceeds its break-even level of output.
A break-even chart shows a business's costs and revenues and level of production needed to break even.
Task 3
It is possible to illustrate a business's break-even output on a break even chart. Your teacher will guide you through how to create a break-even chart of Daisy's business.
It is possible to illustrate a business's break-even output on a break even chart. Your teacher will guide you through how to create a break-even chart of Daisy's business.
Plenary
can you input the break-even point and Margin of safety into your break-even chart. Answer below.
can you input the break-even point and Margin of safety into your break-even chart. Answer below.