Btec Business Revision
Breakeven - answerWhen revenue and expenditure are the same. there is no profit or
loss
variable costs - answerraw materials, change as output increases
margin of safety - answeris the amount by which sales would have to fall before the
break-even point is reached
total costs - answerfixed costs plus variable costs
break-even point - answerwhen a business has made enough money through product
sales to cover the cost of making the product
selling price - answertotal revenue divided by maximum number of products
increasing the price - answerbreak even point falls
reduce the price - answerbreak even point becomes higher
break even analysis - answerplanning tool that helps businesses to make the right
decisions and increase their chances of success
benefits of break even analysis - answerbusiness 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.
risks of ignoring breakeven analysis - answerthe 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 - answerif costs change or if the selling price changes
if costs fall - answerthe breakeven point is lower so the business makes a profit
the lower the breakeven point - answerthe fewer the sales needed to make a profit
total sales revenue formula - answernumber of sales times price per unit
to make a profit - answerrevenue must be higher than expenditure
Breakeven - answerWhen revenue and expenditure are the same. there is no profit or
loss
variable costs - answerraw materials, change as output increases
margin of safety - answeris the amount by which sales would have to fall before the
break-even point is reached
total costs - answerfixed costs plus variable costs
break-even point - answerwhen a business has made enough money through product
sales to cover the cost of making the product
selling price - answertotal revenue divided by maximum number of products
increasing the price - answerbreak even point falls
reduce the price - answerbreak even point becomes higher
break even analysis - answerplanning tool that helps businesses to make the right
decisions and increase their chances of success
benefits of break even analysis - answerbusiness 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.
risks of ignoring breakeven analysis - answerthe 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 - answerif costs change or if the selling price changes
if costs fall - answerthe breakeven point is lower so the business makes a profit
the lower the breakeven point - answerthe fewer the sales needed to make a profit
total sales revenue formula - answernumber of sales times price per unit
to make a profit - answerrevenue must be higher than expenditure
