Neil Patel 40068068 Unit 7 M1
M1: Assess the implications of different activity levels using the results of a break-even
analysis for a selected organisation.
In this assignment, I will assess the implications of different activity levels using the results of a break
even analysis for a selected organisation. There are several alternative methods that a business can
evaluate their data to come up with a break even analysis. The method of use that I am going to be
focusing on is the use of a table. The table takes many different things into account when trying there
are many different calculations that you must take into account.
TATA Jewelers would look at the amount of jewelry that they will be manufacturing over the year to
see where the break even point may be. From here they can see at what quantity produced they will
break even, which would be their indicator that TATA Jewelers will be looking for.
During the second calculation which would be on the break even table would be the calculation of the
variable cost. This is a step that shows the total for the costs that change if the quantity produced
alters at any point. this is a vital cost that you have to calculate as this is one of the figures that gives
you the total for the costs for the business. To figure the number for the total variable costs you must
multiply the number for variable costs by the cost of the production for each product. In terms of TATA
Jewelers, the variable costs is the same figure for the quantity produced and and the cost for the
production is £10. This means that for the total variable cost of 50 products produced is £500. The
calculation for this is 10 x50=500.
The next calculation which occurs for the business on the break even analysis is the calculation for
fixed costs. A fixed cost is a cost that does not change with an increase or decrease in the amount of
goods or services produced or sold. Fixed costs are expenses that have to be paid by a company,
independent of any business activity. The business may still be expected to meet these costs no
matter what the sales figures or volume of production in the short term. For Tata Jewelers, the fixed
cost is a figure of £5000.
The total cost that the business faces is calculated to stand for the outflow the business has made
during a period of production. This is calculated by adding the total variable costs to the fixed costs In
terms of the quantity produced for 100 products the calculations is 1000 + 5000 therefore tallying to a
figure of £6000.
Tata Jewelers must finally calculate their overall profit and loss for a selected/chosen period of
production. This will show the total income that they have for a particular product. The calculation is
figured out by multiplying the number of sales by the price that each product is sold at. For every 100
units sold the business generated £2000 with expenses totaling £6000. This will calculate to a figure
of -£4000 which would be a loss for TATA Jewelers which can be backed up due to this initial figure
being below the break even point.
Finally, TATA Jewelers can calculate their break even point through the guidance of a break even
graph.
M1: Assess the implications of different activity levels using the results of a break-even
analysis for a selected organisation.
In this assignment, I will assess the implications of different activity levels using the results of a break
even analysis for a selected organisation. There are several alternative methods that a business can
evaluate their data to come up with a break even analysis. The method of use that I am going to be
focusing on is the use of a table. The table takes many different things into account when trying there
are many different calculations that you must take into account.
TATA Jewelers would look at the amount of jewelry that they will be manufacturing over the year to
see where the break even point may be. From here they can see at what quantity produced they will
break even, which would be their indicator that TATA Jewelers will be looking for.
During the second calculation which would be on the break even table would be the calculation of the
variable cost. This is a step that shows the total for the costs that change if the quantity produced
alters at any point. this is a vital cost that you have to calculate as this is one of the figures that gives
you the total for the costs for the business. To figure the number for the total variable costs you must
multiply the number for variable costs by the cost of the production for each product. In terms of TATA
Jewelers, the variable costs is the same figure for the quantity produced and and the cost for the
production is £10. This means that for the total variable cost of 50 products produced is £500. The
calculation for this is 10 x50=500.
The next calculation which occurs for the business on the break even analysis is the calculation for
fixed costs. A fixed cost is a cost that does not change with an increase or decrease in the amount of
goods or services produced or sold. Fixed costs are expenses that have to be paid by a company,
independent of any business activity. The business may still be expected to meet these costs no
matter what the sales figures or volume of production in the short term. For Tata Jewelers, the fixed
cost is a figure of £5000.
The total cost that the business faces is calculated to stand for the outflow the business has made
during a period of production. This is calculated by adding the total variable costs to the fixed costs In
terms of the quantity produced for 100 products the calculations is 1000 + 5000 therefore tallying to a
figure of £6000.
Tata Jewelers must finally calculate their overall profit and loss for a selected/chosen period of
production. This will show the total income that they have for a particular product. The calculation is
figured out by multiplying the number of sales by the price that each product is sold at. For every 100
units sold the business generated £2000 with expenses totaling £6000. This will calculate to a figure
of -£4000 which would be a loss for TATA Jewelers which can be backed up due to this initial figure
being below the break even point.
Finally, TATA Jewelers can calculate their break even point through the guidance of a break even
graph.
