1 / 11

Homework

Homework. Complete questions 5a and 5b i) and ii) about the Sony Playstation Will be details on www.fremanbusiness.wordpress.com too Due 22 nd Nov. The Break Even Song. Verse 1. Here’s a song to help our learning, About what a business should be earning,

leane
Download Presentation

Homework

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Homework • Complete questions 5a and 5b i) and ii) about the Sony Playstation • Will be details on www.fremanbusiness.wordpress.com too • Due 22nd Nov

  2. The Break Even Song

  3. Verse 1 Here’s a song to help our learning, About what a business should be earning, To cover all that is has been spending, On it our exam grade is depending,

  4. Chorus So what I’ve been asked to do Is work out what we need in revenue To stop us from making a loss Because when we do it upsets the boss I’m planning our business I’m planning our business

  5. Form yourself in to a song writing group of no more than 3. Each group needs to write another verse on a topic from the list. Use the fact sheets to help you. • The break-even formula • Constructing a break-even graph • Contribution • Margin of Safety • Advantages of break-even • Limitations of break-even If you finish, let me know. I’ll collate all the verses in to a song. I also have some exercises for you to do.

  6. Factsheet : Break-even formula Fixed Costs / Contribution per unit = no of units required to break-even Remember that the outcome of the formula isn’t a monetary amount, it’s the number of items the business must make and sell to cover it’s costs

  7. Factsheet: Break-even graph • Break-even is the output where total revenue line crosses total costs line • Profit is above this point • Loss is below this point

  8. Factsheet : contribution • Contribution per unit is the sales price per unit minus the variable cost per unit • Total contribution is contribution per unit x no of units made & sold Contribution per unit to: Fixed Costs Profit Sales price per unit Variable Cost Per unit

  9. Factsheet : Margin of safety • The difference between what is currently being made and what is needed to break-even • Current output minus break-even output • Positive number good, negative bad! • Tells you how much output can fall by before you make a loss

  10. Factsheet : Advantages of Break-Even • Simple tool • Able to ‘model’ changes, such as increases in costs or reduction in sales price • Provides a target/focus for the business owner & staff

  11. Factsheet : Disadvantages of Break-Even • It assumes that you sell at the same price • There is an assumption that you will sell all that you produce. In reality it is more likely some will be kept in stock so you won’t earn sales income but will have incurred the cost of manufacture • The tool assumes that prices will remain the same throughout the period you are looking at • This method is only as good as the quality of the research used to gather the information

More Related