• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Demonstrate the impact of changing cost and revenue data on the breakeven point of a selected business

Extracts from this document...

Introduction

Demonstrate the impact of changing cost and revenue data on the breakeven point of a selected business Breakeven analysis can also be used to show how risky a business might be if the revenues or costs are not as originally predicted. Mia has considered a range of alternative scenarios where the cost and revenue are different to her original figures. Changes in fixed costs No of Customers Fixed costs Variable Costs Total Costs Revenue Profit/ Loss 0 1350 0 1350 0 (1350) 2000 1350 3000 4350 6000 1650 4000 1350 6000 7350 12000 4650 6000 1350 9000 10350 18000 7650 8000 1350 12000 13350 24000 10650 10000 1350 15000 16350 30000 13650 12000 1350 18000 19350 36000 16650 14000 1350 21000 22350 42000 19650 16000 1350 24000 25350 48000 22650 18000 1350 27000 28350 54000 25650 In the table above I can see the fixed costs have increased to 1,350. The fixed costs in the original sheet were 1,200. The differences between the two sums are �150. The Variable costs stay the same in the two sheets, but the total costs are different. ...read more.

Middle

2000 1200 3500 4700 6000 1300 4000 1200 7000 8200 12000 3800 6000 1200 10500 11700 18000 6300 8000 1200 14000 15200 24000 8800 10000 1200 17500 18700 30000 11300 12000 1200 21000 22200 36000 13800 14000 1200 24500 25700 42000 16300 16000 1200 28000 29200 48000 18800 18000 1200 31500 32700 54000 21300 Changes In variable costs In the graph above the variable costs have increased to �1.75, in the original table the variable cost was �1.50. The fixed cost and the revenue is the same as the original, but the total cost and profit/ loss is different. In the original table the total cost for 18000 customers was 28200 and the total cost in the table above for 18000 customers is 32700. There is a big difference in the table above compared to the original. 1200 -------- �3.00- �1.75= �1.25 The break even point is �960 No of Customers Fixed costs Variable Costs �1.75 Total Costs Revenue Profit/ Loss 0 1200 0 1200 0 (1200) 2000 1200 3500 4700 6000 1300 4000 1200 7000 8200 12000 3800 6000 1200 10500 11700 18000 6300 8000 1200 14000 15200 24000 8800 10000 1200 17500 18700 30000 11300 ...read more.

Conclusion

The original revenue was �3.00, but the table above is �3.50. The fixed and variable costs are the same as the original, but the Revenue is different. The profit/ loss are different because in the original table at 14000 customers the profit/ loss are 19800 and in the table above the profit/ loss for 14000 customers are 26800. 1200 ------- �3.50- �1.50= �2.00 The breakeven point is �600 No of Customers Fixed costs Variable Costs Total Costs Revenue �2.70 Profit/ Loss 0 1200 0 1200 0 (1200) 2000 1200 3000 4200 5400 1200 4000 1200 6000 7200 10800 3600 6000 1200 9000 10200 16200 6000 8000 1200 12000 13200 21600 8400 10000 1200 15000 16200 27000 10800 12000 1200 18000 19200 32400 13200 14000 1200 21000 22200 37800 15600 16000 1200 24000 25200 43200 18000 18000 1200 27000 28200 48600 20400 The table above has a revenue of �2.70. The fixed and variable costs are the same as the original table. The revenue is different so at 8000 customers the original the revenue is 24000, and on the table above at 8000 customers the revenue is 21600. 1200 -------- 2.70- 1.50= 1.20 The break-even point is 1000 1 Caroline McCarthy 12 F ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level Accounting & Financial Management section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level Accounting & Financial Management essays

  1. A2 Business CourseWork

    The service aims to cut five million tonnes of CO2 emissions and reduce our customers' combined annual energy bill by around �180 million. The service offers fixed cost cavity wall and loft insulation for just �198 each (or free to those over 70 or on benefits).

  2. Analyse the impact of the economic environment of business performance.

    On the Lloyds TSB website it showed me that if the �15,000 was to be put in a savings account after two years the �15,000 she put in would raise to �16,613.54. The interest rate would be 5.25% AER/Gross. From option two the monthly mortgage repayment would reduce by �171.68.

  1. In this assignment I will be explaining in detail the importance of cash flow, ...

    The cash flow statement, which is a statement that shows the income and outcome of money in a business, breaks the sources of cash generation into three sections: operational cash flows, investing, and financing. This breakdown allows the user of financial statements to determine where the company is deriving its cash for operations.

  2. The maintenance of accurate records supplies the company with the financial data that assists ...

    words it shows the manager where spending is greater, less or equal to the budget plan. It also enables identifying which factors have caused the variance to be adverse or favourable. Forecasted Actual Variance Sales revenue 15 000 14600 (400)

  1. Unit 2 - Investigating Business

    3. To satisfy customers needs. To do this I would provide customer services so all customers can get their needs and wants. I believe customer services is really important with my business because its dealing with clothes and problems such as an outfit not fitting is a problem that customer services can deal with. 4.

  2. Investigating Business Resources

    The core business is distributor of fitness equipment (Panatta). Here are the compositions: sales, maintenance and service and after sales. There are also other branches within the company: a number of operational lease companies, interior companies and sale of all kind of services that have been directed on the entrepreneur in the fitness branch.

  1. Evaluate the reliability of break-even analysis in estimating budgeted activity levels for selected ...

    Limitations/assumptions of break even analysis: All costs are classified as either fixed or variable. If not impossible or impractical, dividing costs into the variable and fixed cost elements as an extremely difficult job. This is attributable to the inherent nature or characteristics of the cost per selling-product.

  2. Financial forecasting for business, Start up costs, running costs, variable and fixed costs

    purchase the vehicle for the bigger tax deduction at the end of the year. Advertisement Word of mouth alone isn't enough to get the word out about your new business. Advertising start-up costs can be as small as advertisements in a local newspaper.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work