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    Revenue and Costs & Break-even analysis

    molly has a brother his name is Dlan, he has recently opened a Sandwich Bar but his business knowledge is not as good as molly’s. He needs your help to manage his costs and revenues and look at when he is going to break even.

    Dlan’s revenue is broken down below

    He expects to sell between 0 & 1400 sandwiches a week. His average price of a sandwich is £1.50. Work out how much revenue he is set to make if he sells 100, 500 and 800 sandwiches in a week.

    Dlan has a few costs which he needs to work out, firstly he does not understand what Fixed costs and Variable costs are. Briefly explain the difference between them, then spilt his costs into two categories.

    Rent, Telephone rental, Telephone calls, Gas & water rates, Sandwich ingredients, petrol, Car lease payments. Loan payment

    Fixed Costs Variable Costs

    Now that you have split your costs into two categories you need to work out some figures.

    Dlan’s costs are as follows

    Item Costs per week

    Rent £150

    Telephone Rental £4

    Telephone calls £3

    Gas and Water rates £10

    Sandwich ingredients £1.00

    Petrol £25

    Car lease payments £30

    Loan payment £40

    Work out the total cost per week for both his fixed and variable costs, these variable costs (apart from ingredients) are based on making 200 sandwiches

    Using the figures given work out the variable cost per unit. (add up the total variable costs and divide by 200)

    Imagine Dlan sold 200 sandwiches in a week what would his average cost of production per unit be?

    Explain to Dlan how he could increase his revenue for his business, point out the advantages and disadvantages of each method.

    Break even Analysis

    Businesses can use this information about their revenues and costs to calculate their break-even level of output.

    Why do you think a business might need to know its break-even point?

    Dlan predicts he might sell between 0 -1400 sandwiches in a week. We can enter this data into a table and work out his break-even point in the table. Using the figures form the previous pages enter the relevant data in to the correct columns.

    Sandwiches sold Sales Revenue Fixed Costs Variable Costs Total Costs Profit/Loss

    0 0 £234 0 £234 -£234

    200

    400

    600

    800

    1000

    1200

    1400

    We can also illustrate this using a graph

    Break Even point =

    You can also work out breakeven by using the following formula

    Break-even output = Total fixed costs / contribution per unit

    Contribution per unit is worked out by

    Contribution per unit = selling price of the product – variable cost per unit
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    (Original post by ehruhure)
    Revenue and Costs & Break-even analysis

    molly has a brother his name is Dlan, he has recently opened a Sandwich Bar but his business knowledge is not as good as molly’s. He needs your help to manage his costs and revenues and look at when he is going to break even.

    Dlan’s revenue is broken down below

    He expects to sell between 0 & 1400 sandwiches a week. His average price of a sandwich is £1.50. Work out how much revenue he is set to make if he sells 100, 500 and 800 sandwiches in a week.

    Dlan has a few costs which he needs to work out, firstly he does not understand what Fixed costs and Variable costs are. Briefly explain the difference between them, then spilt his costs into two categories.

    Rent, Telephone rental, Telephone calls, Gas & water rates, Sandwich ingredients, petrol, Car lease payments. Loan payment

    Fixed Costs Variable Costs

    Now that you have split your costs into two categories you need to work out some figures.

    Dlan’s costs are as follows

    Item Costs per week

    Rent £150

    Telephone Rental £4

    Telephone calls £3

    Gas and Water rates £10

    Sandwich ingredients £1.00

    Petrol £25

    Car lease payments £30

    Loan payment £40

    Work out the total cost per week for both his fixed and variable costs, these variable costs (apart from ingredients) are based on making 200 sandwiches

    Using the figures given work out the variable cost per unit. (add up the total variable costs and divide by 200)

    Imagine Dlan sold 200 sandwiches in a week what would his average cost of production per unit be?

    Explain to Dlan how he could increase his revenue for his business, point out the advantages and disadvantages of each method.

    Break even Analysis

    Businesses can use this information about their revenues and costs to calculate their break-even level of output.

    Why do you think a business might need to know its break-even point?

    Dlan predicts he might sell between 0 -1400 sandwiches in a week. We can enter this data into a table and work out his break-even point in the table. Using the figures form the previous pages enter the relevant data in to the correct columns.

    Sandwiches sold Sales Revenue Fixed Costs Variable Costs Total Costs Profit/Loss

    0 0 £234 0 £234 -£234

    200

    400

    600

    800

    1000

    1200

    1400

    We can also illustrate this using a graph

    Break Even point =

    You can also work out breakeven by using the following formula

    Break-even output = Total fixed costs / contribution per unit

    Contribution per unit is worked out by

    Contribution per unit = selling price of the product – variable cost per unit
    Did you bother typing all of this yourself lmao?

    Posted from TSR Mobile
 
 
 
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