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Break Even Analysis

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Introduction

Break Even Analysis Nicola Lamprecht 20th Jan 09 D.Shahrezaey 0703123 Q 1: The first way in which HMV generates sales revenue is through the sale of good in store like CDs, books and DVDs. This is the main front runner in sales, creating large profits in the millions especially when new CDs and DVDs are released. Secondly HMV makes sales revenue is through online music, movie and game downloads. But they are not a very big competitor in this market as of yet as their downloads cannot be put onto apple MP3 players which are the main MP3 players and they only started this store in 2005 compared to iTunes which was released for customers to use on the 9th of January 2001 making a 4year difference over the competitor. Thirdly they sell all their products, books, CDs and DVDs and more in their new offshore Internet fulfilment facility in Guernsey, as it is a recognized tax-haven. Under European law, retailers that operate outside the European Union can sell products valued at less than �18 to customers in member states without charging VAT which is why they moved them selves to the channel island ...read more.

Middle

is keeping your shop going; they are the sellers and staff who generates your sales revenue and profit in the long run. Rental of the premise Is one of the main money grabbing parts of opening a new store. If bought outright, then you will probably have a mortgage repayment and plenty of refurbishment and upkeep costs to contend with, but when you rent this is up to the landlord to keep this under control and there is no initial mega cost to fork out. In store security equipment to work along side of the staff and especially security would consist of door alarms, CCTV and tagging all expensive individual items with security tags and magnetic strips. d) The importance of cost to a business is essential if they are looking to make a decent profit and maximise the sales revenue and income. Lower the buying price, increasing the % of profit and thus increasing sales revenue leading to greater profit in the long run. Most of the costs in a business consist of trying to generate sales, like, increasing advertising to let the public know what is that you do, sell and want them to buy. ...read more.

Conclusion

As HMV has been a company for nearly 100years now I am sure it recognized the importance of a good profit in keeping its operations running smoothly. All profit that HMV generates is from sales of media products, books and other smaller lines like apple equipment and games. Task 2: Fixed Costs: �100,000 Variable Costs: �20 Selling Cost: �30 Break Even Point: 10,000 Treatments P.A a) Using the formulae (Fixed Costs (over) Contribution Per Unit), I was able to work out that �100,000 = 10,000 treatments (�30 - �20) = �10 Output Total Revenue Total variable Costs Total Fixed Costs Total Costs 5,000 150,000 100,000 100,000 200,000 10,000 300,000 200,000 100,000 300,000 20,000 600,000 400,000 100,000 500,000 b) If Gillian was to work a 5day week every week for a whole year I would advise Gillian to perform over 38treatments a day every day for her working week to produce a profit. 5days a week = 260 working days in a year 260wd divided by 10,000 treatments = 38.04 treatments a day just to break even. If she were to make a profit in her business, she would have to perform over 38 treatments per day ever day or an average of 39 per week if all was added together. ...read more.

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