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Break even
Lesson Outcomes:
To understand how to work out the break-even point mathematically To understand how to construct a break even chart
Recap
Sales Revenue Fixed cost Variable cost Total cost Average cost Whats another name for sales revenue?
Fixed costs = 2,000 Variable costs = 10 per unit Selling price = 20 per unit
Fixed costs = 2,000 Variable costs = 10 per unit Selling price = 20 per unit
1,000
2,000
3,000
Fixed costs = 2,000 Variable costs = 10 per unit Selling price = 20 per unit
1,000
3,000
2,000
4,000
3,000
5,000
2,000
Fixed costs = 2,000 Variable costs = 10 per unit Selling price = 20 per unit
1,000
3,000 2,000
2,000
4,000 4,000
3,000
5,000 6,000
2,000
0
Fixed costs = 2,000 Variable costs = 10 per unit Selling price = 20 per unit
Fixed costs
Fixed costs
Number of units
Variable costs
Fixed costs
Variable costs
100
Number of units
Total costs
Variable costs
100
Number of units
Sales revenue
Sales revenue
Total costs
Fixed costs
Variable costs
0 200
100
Number of units
Break-even point
Sales revenue Break-even Point Total costs
Fixed costs
Variable costs
100
200
Number of units
Question 1
Fixed costs = 10,000 Variable costs = 10 per unit Selling price = 50 per unit Work out the break even point Plot a break-even graph
Maximum y value is 15,000 Maximum x value is 300
Question 2
Fixed costs = 5,000 Variable costs = 10 per unit Selling price = 20 per unit Work out the break even point Plot a break-even graph
Maximum y value is 12,000 Maximum x value is 600
Question 3
Fixed costs = 7,000 Variable costs = 7.50 per unit Selling price = 21.50 per unit Work out the break even point Plot a break-even graph
Maximum y value is 13,000 Maximum x value is 600
200
400
600
Sales revenue
Fixed costs = 7,000 Variable costs = 7.50 per unit Selling price = 21.50 per unit Formulas Fixed costs stay the same Total variable costs = variable costs x number of units Total Costs = fixed costs + total variable costs Sales revenue = selling price x number of units
Question 4
Fixed costs = 2,000 Variable costs = 2 per unit Selling price = 7.40 per unit Work out the break even point Plot a break-even graph Units sold 400
Question 5
Fixed costs = 23,000 Variable costs = 250 per unit Selling price = 500 per unit Work out the break even point Plot a break-even graph Units sold 150
Extension task mathematically work out the break-even point for all the grids using the formula on the next slide