5.4 break even
- Created by: hanfa
- Created on: 04-10-20 18:28
View mindmap
- 5.4 Break-even
- calculating break-even from a table of output, revenue and cost figures.
- to find break even, look at total costs and total revenue to see at which output the two are equal, this the break even point.
- calculating break even from a graph
- break even is where the total revenue line crosses the total cost line.
- break even- the amount a business must sell to earn enough revenue to just cover its costs so it does not make a profit or a loss
- calculating break even from a formula
- break even output= total fixed costs /contribution per unit(price-variable cost per unit)
- total fixed cost/ (price-variable costs per unit)
- use of break even forecasts
- planning how much to produce
- the forecast shows how much the business must sell to break even, if the business thinks it wont be able to see enough, it may not decide to produce at all.
- if the business thinks it can sell this amount it may decide to produce this amount and then increase production as sales begin to reach the break even point.
- the forecast shows how much the business must sell to break even, if the business thinks it wont be able to see enough, it may not decide to produce at all.
- planning the price to charge
- the break even forecast shows that the business will not break even at the proposed selling point. so the business would either increase selling point or reduce costs.
- planning how much to produce
- calculating break-even from a table of output, revenue and cost figures.
Similar Business Studies resources:
Teacher recommended
Comments
No comments have yet been made