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Costs, revenue and breaking even

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Introduction

TO: Mr Cooke From: Lee Houghton Subject: Mini Enterprise Report Part 3 Date: 15/10/04 INTRODUCTION In this part of the coursework I will be looking at costs, revenue and breaking even. To do this we will have to work out our fixed costs, variable costs, expected total revenue, the amount of cars needed to break even and whether we make a profit or loss. A Business Plan Material and Equipment Fixed costs All of these materials and supplies will be bought from a local D.I.Y shop. * 4 sponges incl. 1 revolving sponge: - �32 * 4 buckets: - �10 * 4 scrubbing brushes for wheels: - �4 * Advertising Leaflets: - �5 * 4 chamois leather: - �12 Total fixed costs: - �63 Variable costs The washing up liquid can be bought from any local shop, but the water will be supplied from each of us from our homes although we wont be actually paying for the water it is included for business purposes. ...read more.

Middle

This last table will show a break-even analysis for our lower price at �3.00 per car. No. Of cars f. Costs (�) v. Costs (�) t. Costs (�) Revenue (�) Profit/ Loss (�) 0 �63 0 �63 �0 -�63.00 10 �63 �4.50 �67.50 �30 -�37.50 20 �63 �9.00 �72 �60 -�12.00 30 �63 �13.50 �76.50 �90 +�13.50 40 �63 �18 �81 �120 +�39.00 This shows that the number of cars we need to wash is about 24 to break even. Our questionnaire indicated that �3 to �4 is a fair price to wash their cars. At a cost of �3.00 per car we would need to wash 24 cars to break even, this is the highest number of cars we need to wash to break even and our lowest price we thought. The highest price of �4.00 would mean that we would only need to wash 18 cars to break even, but the higher price may mean that our customers be put of by the higher price. ...read more.

Conclusion

Other options would have involved loaning money from banks, which was impossible because of our age, or maybe getting in a sleeping partner who could have provided money for our business but wouldn't actually been involved in the decision making of our business. We couldn't find anyone who wanted to invest the money into our business. Business Structure And Internal Organised We have decided our business is going to be a partnership, advantages in been part of a partnership are that the workload can be spread over the partners and the funding of the business can also be spread over the partners. The law states that partnerships have unlimited liability and the profits must be shared equally, unless otherwise stated in the deed of partnership. Unlimited liability is a big disadvantage in partnerships as trust is essential in the business, if one partner buys something for himself in the name of the company the rest of the partners have to pay for it as well. And could lose everything to pay of a debt that only one person may have caused. ...read more.

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