Business Studies - 0450 CIE

Break-even Analysis:

Gbogbo ọrọ náà

How many products must a business sell before it stops making a loss and starts making a profit? That single number, the break-even point, is one of the most useful figures an owner can know. It tells them the minimum they must sell to survive, and how much safety margin they have if sales fall.

In this lesson you will learn to read and construct a break-even chart, calculate the break-even output from cost and price data, work out the margin of safety, and use break-even analysis to make simple decisions such as the effect of a higher price. You will also learn the limitations you must keep in mind whenever you use it.

Ebumnobi

  1. The concept of break-even
  2. Construct, complete or amend a simple break-even chart
  3. Interpret a given chart and use it to analyse a situation
  4. Calculate break-even output from given data
  5. Define, calculate and interpret the margin of safety
  6. Use break-even analysis to help make simple decisions, e.g. impact of higher price
  7. Understand the limitations of break-even analysis

Nkuzi Olu

Gee ntị na nkuzi a na ngwa

Maapụ uche

E seela isiokwu a ka ị hụ otu echiche si ejikọta.

Mepee maapụ uche na ngwa

Kaadị ncheta

Omume ncheta ngwa ngwa n'ihe a na-anwale n'isiokwu a.

Mee omume kaadị ndị a na ngwa

Akwụkwọ Ọmụmụ

Break-even analysis turns costs and prices into a clear target: the level of sales needed to avoid a loss. The quicker a new business reaches break-even, the more likely it is to survive. A lower break-even point is always better because fewer units must be sold before profit begins. Break-even is one of the most heavily tested calculation topics, so the method here is worth real marks.

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Nnyocha Ọmụmụ

Ekele diri gi maka imecha ihe karịrị na Break-even Analysis:. Ugbu a na ị na-enyochakwa isi echiche na echiche ndị dị mkpa, ọ bụ oge iji nwalee ihe ị ma. Ngwa a na-enye ụdị ajụjụ ọmụmụ dị iche iche emebere iji kwado nghọta gị wee nyere gị aka ịmata otú ị ghọtara ihe ndị a kụziri.

Ị ga-ahụ ngwakọta nke ụdị ajụjụ dị iche iche, gụnyere ajụjụ chọrọ ịhọrọ otu n’ime ọtụtụ azịza, ajụjụ chọrọ mkpirisi azịza, na ajụjụ ede ede. A na-arụpụta ajụjụ ọ bụla nke ọma iji nwalee akụkụ dị iche iche nke ihe ọmụma gị na nkà nke ịtụgharị uche.

Jiri akụkụ a nke nyocha ka ohere iji kụziere ihe ị matara banyere isiokwu ahụ ma chọpụta ebe ọ bụla ị nwere ike ịchọ ọmụmụ ihe ọzọ. Ekwela ka nsogbu ọ bụla ị na-eche ihu mee ka ị daa mba; kama, lee ha anya dị ka ohere maka ịzụlite onwe gị na imeziwanye.

  1. Contribution per unit is calculated as: A. fixed costs minus variable costs B. selling price minus variable cost per unit C. total revenue minus total cost D. selling price minus fixed costs Answer: B
  2. Break-even output equals fixed costs divided by: A. selling price B. variable cost per unit C. contribution per unit D. total revenue Answer: C
  3. Fixed costs are $4000 and contribution per unit is $8. The break-even output is: A. 32 000 units B. 500 units C. 2 units D. 4008 units Answer: B
  4. The margin of safety is: A. break-even output minus fixed costs B. actual output minus break-even output C. selling price minus variable cost D. total cost minus revenue Answer: B
  5. On a break-even chart, the business makes a profit when output is: A. below the break-even point B. above the break-even point C. exactly at the break-even point D. zero Answer: B

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