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# Break Even

Extracts from this document...

Introduction

Break even analysis and its links to strategic aims and objectives Terms of reference I have been asked to produce a report on 'break even analysis and its links to strategic aims and objectives', for the team leader of the PLC Company Tesco. The report is to be submitted by approx 10th May 2007. Procedure In order to complete this assignment I am going to research on a product of the Tesco Company, to base my findings on. Also I am going to research on break even. Task a Definition of Break Even: Break even is when the point on the graph indicates when neither a profit nor a loss is made. The figures I was given to work on are: Materials= �7 Direct Labour= �3 Selling Price= �15 Fixed Costs= �18000 Now I am going to work out the variable costs, total cost, revenue and the profit and loss, using the figures above and the formulas. ...read more.

Middle

costs, revenue, profit etc? The break even point on the graph indicates that it is the point at which the gains equal the losses. There is no profit of loss made at the break even point. The break even point is made when the cost and revenue are equal. The break even on my graph shows that no profit or loss will be made at 9 productions of units. The break even graph also tells the company whether have made their profits and losses, using the figures. The break even graph meets the first objective, by showing when the profit will be made, by selling an amount of production units. This amount is 9. If the company sell nine or more production units, then the profit will be made, because this is the break even point on the graph. Anything lower than that will cause losses. The second objective is met by looking at the break even point on the graph. ...read more.

Conclusion

They keep the graphs and use them in the future to improve the new productions they sell. c) Does the use of the model allow the firm to meet its objectives? If so how/why? If not why not? The Tesco company objectives are: 1) To make profit by selling goods to customers. 2) The purpose of the business is to sell a number of production units, to increase sales and profits. 3) To offer customers the best value for money at the most competitive prices. The model allows the firm to meet its objectives, because the graph can indicate the where the profits will increase and where the losses are made. The graph shows how many units of production, they have to sell before they start making the profits, and if they do, the company meets their aims and objectives. The break even graph is very important to the company, because this way they work out by using the formulas and the given prices, to see whether the company will increase their sales and profits. ?? ?? ?? ?? ...read more.

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