slide 1 notebook friday, 22 august 2014registration respect yourself - respect each other - respect...

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Tuesday 11 April 2023Registration

Respect yourself - Respect each other - Respect the environment

Starter

How many words can you find in the business term:

‘Break – even’?

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The Big Picture

Our lesson objective is…• To learn how to draw break – even charts

By the end of this lesson:• All students can differentiate between fixed and

variable costs• Most students can show costs on a diagram • Some students can calculate break even point

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Break even...

Firms spend money making their products. These are called costs.

Variable costs = Change depending on output

Fixed costs = remain the same no matter how much is produced

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Cost sort!

Fixed or variable costs?

Rent

Advertising

Maintenance of machinery

Managers’ salaries

Interest payments on loans

Electricity costs

Overtime pay

Raw materials

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Starter

Fixed costs Variable costs

RentAdverti

sing

Maintenance of machinery

Managers’ salaries

Interest payments on loans

Electricity costs

Overtime pay

Raw materials

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Sales revenue

Firms get money from selling their products. This is called sales revenue...

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Break even...

Break even is the point at which the sales are exactly the same as the costs.

Total costs = Fixed costs + variable costs

Sales revenue = Selling price x number of units sold

Profit = Sales revenue – total costs

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Evans Cricket Bats Ltd

Stage 1: Complete this table...

Output (No of cricket bats)

Fixed costs

Variable costs

Total costs Sales revenue

1,000 £40,000

2,000 £40,000

3,000 £100,000

4,000 £140,000

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Evans Cricket Bats Ltd

Check your answers...


Fixed costs

Variable costs

Total costs Sales revenue

1,000 £40,000 £20,000 £60,000 £35,000

2,000 £40,000 £40,000 £80,000 £70,000

3,000 £40,000 £60,000 £100,000 £105,000

4,000 £40,000 £80,000 £120,000 £140,000

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Stage 2: Showing costs on a graph...

Turn your paper so it is LANDSCAPE and copy this...

Cos

ts (

£)


1000 2000 3000 4000

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Showing costs on a graph...

Insert fixed costs

Cos

ts (

£)


1000 2000 3000 4000

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Add in variable costs...

Cos

ts (

£)


1000 2000 3000 4000

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Calculate total costs...

Cos

ts (

£)


1000 2000 3000 4000

Total costs

Variable costs

Fixed costs

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Showing revenue on a graph

Now add revenue to your graph....

Cos

ts (

£)


1000 2000 3000 4000

Total costs

Variable costs

Fixed costs

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Showing revenue on a graph

Now add revenue to your graph....

Cos

ts a

nd s

ales

re

venu

e (£

)


1000 2000 3000 4000

Total costs

Variable costs

Fixed costs

Sales revenue

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Break – even tasks...• Now have a go at the break – even exercise

sheets...

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Check your work

How did you get on?

No. sold

Sales Revenue

FixedCosts

VariableCosts

TotalCosts

Profit/Loss

0 £0 £200 £0 £200 (200)

10 £80 £200 £20 £220 (140)

20 £160 £200 £40 £240 (80)

30 £240 £200 £60 £260 (20)

40 £320 £200 £80 £280 40

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Review

What have you learnt today?

slide 1 notebook friday, 22 august 2014registration respect yourself - respect each other - respect...

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