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BTEC Business Revision questions with accurate detailed answers
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Breakeven - ✔✔When revenue and expenditure are the same. there is no profit or loss
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variable costs - ✔✔raw materials, change as output increases
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margin of safety - ✔✔is the amount by which sales would have to fall before the break-
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even point is reached
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total costs - ✔✔fixed costs plus variable costs
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break-even point - ✔✔when a business has made enough money through product sales to
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cover the cost of making the product
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selling price - ✔✔total revenue divided by maximum number of products
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increasing the price - ✔✔break even point falls
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reduce the price - ✔✔break even point becomes higher
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break even analysis - ✔✔planning tool that helps businesses to make the right decisions
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and increase their chances of success
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benefits of break even analysis - ✔✔business knows the fixed and variable costs linked to a
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product.
the business can set the best price for a product.
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it allows the business to set a margin of safety.
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, 2
risks of ignoring breakeven analysis - ✔✔the business does not know the costs of
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production and running costs. || || ||
the business does not know how many items it must sell to make a profit.
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the business may make a loss without realising or knowing why.
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break even point will change - ✔✔if costs change or if the selling price changes
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if costs fall - ✔✔the breakeven point is lower so the business makes a profit
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the lower the breakeven point - ✔✔the fewer the sales needed to make a profit
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total sales revenue formula - ✔✔number of sales times price per unit
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to make a profit - ✔✔revenue must be higher than expenditure
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profit formula - ✔✔revenue take away expenditure
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netflow/outflow formula - ✔✔inflows take away outflows || || || || || ||
net inflow - ✔✔increases money already in the bank
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net outflow - ✔✔reduces the money already in the bank
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improving inflows - ✔✔chase up late payments.
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avoid giving credit to unknown customers.
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BTEC Business Revision questions with accurate detailed answers
|| || || || || || ||
Breakeven - ✔✔When revenue and expenditure are the same. there is no profit or loss
|| || || || || || || || || || || || || ||
variable costs - ✔✔raw materials, change as output increases
|| || || || || || || ||
margin of safety - ✔✔is the amount by which sales would have to fall before the break-
|| || || || || || || || || || || || || || || ||
even point is reached
|| || ||
total costs - ✔✔fixed costs plus variable costs
|| || || || || || ||
break-even point - ✔✔when a business has made enough money through product sales to
|| || || || || || || || || || || || || ||
cover the cost of making the product
|| || || || || ||
selling price - ✔✔total revenue divided by maximum number of products
|| || || || || || || || || ||
increasing the price - ✔✔break even point falls
|| || || || || || ||
reduce the price - ✔✔break even point becomes higher
|| || || || || || || ||
break even analysis - ✔✔planning tool that helps businesses to make the right decisions
|| || || || || || || || || || || || || ||
and increase their chances of success
|| || || || ||
benefits of break even analysis - ✔✔business knows the fixed and variable costs linked to a
|| || || || || || || || || || || || || || || ||
product.
the business can set the best price for a product.
|| || || || || || || || || ||
it allows the business to set a margin of safety.
|| || || || || || || || ||
, 2
risks of ignoring breakeven analysis - ✔✔the business does not know the costs of
|| || || || || || || || || || || || || ||
production and running costs. || || ||
the business does not know how many items it must sell to make a profit.
|| || || || || || || || || || || || || ||
the business may make a loss without realising or knowing why.
|| || || || || || || || || ||
break even point will change - ✔✔if costs change or if the selling price changes
|| || || || || || || || || || || || || ||
if costs fall - ✔✔the breakeven point is lower so the business makes a profit
|| || || || || || || || || || || || || ||
the lower the breakeven point - ✔✔the fewer the sales needed to make a profit
|| || || || || || || || || || || || || ||
total sales revenue formula - ✔✔number of sales times price per unit
|| || || || || || || || || || ||
to make a profit - ✔✔revenue must be higher than expenditure
|| || || || || || || || || ||
profit formula - ✔✔revenue take away expenditure
|| || || || || ||
netflow/outflow formula - ✔✔inflows take away outflows || || || || || ||
net inflow - ✔✔increases money already in the bank
|| || || || || || || ||
net outflow - ✔✔reduces the money already in the bank
|| || || || || || || || ||
improving inflows - ✔✔chase up late payments.
|| || || || || ||
avoid giving credit to unknown customers.
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