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Business AS AQA

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  1. 1-1-the-nature-and-purpose-of-business as
    3 主题
  2. 1-2-forms-of-business as
    5 主题
  3. 1-3-the-external-environment as
    5 主题
  4. 2-1-management-and-leadership as
    3 主题
  5. 2-2-management-decision-making as
    4 主题
  6. 2-3-the-role-and-importance-of-stakeholders as
    3 主题
  7. 3-1-marketing-objectives as
    1 主题
  8. 3-2-understanding-markets-and-customers as
    5 主题
  9. 3-3-making-marketing-decisions as
    2 主题
  10. 3-4-the-marketing-mix as
    7 主题
  11. 4-1-operational-objectives as
    2 主题
  12. 4-2-operational-performance as
    1 主题
  13. 4-3-efficiency-and-productivity as
    3 主题
  14. 4-4-quality as
    1 主题
  15. 4-5-inventory-and-supply-chain-management as
    3 主题
  16. 5-1-financial-objectives as
    2 主题
  17. 5-2-financial-performance as
    6 主题
  18. 5-3-sources-of-finance as
    3 主题
  19. 5-4-cash-flow-and-profit as
    1 主题
  20. 6-1-human-resource-objectives as
    1 主题
  21. 6-2-human-resource-performance as
    1 主题
  22. 6-3-organisational-design as
    3 主题
  23. 6-4-human-resource-planning as
    4 主题
  24. 6-5-motivation as
    1 主题
  25. 6-6-improving-employer-employee-relations as
    2 主题
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Exam code:7131

Breakeven calculations

  • The breakeven point is the level of output at which the total revenue is exactly equal to total costs

    • At the breakeven point, the business is making neither a profit nor a loss

  • Breakeven calculations include the following:

    • Calculating the contribution

    • Calculating the breakeven point

    • Calculating the margin of safety

    • Calculating the profit or loss

    • Calculating the impact on breakeven of a change to costs or revenue

Calculating contribution

  • Contribution per unit is used to calculate the breakeven point

    • It is calculated using the formula

Contribution space space space space space space equals space space space space space space space space Selling space price space minus space Variable space cost space of space producing space one space unit

  • It is called contribution, as once the variable cost of the unit has been paid, the remainder of the selling price contributes to paying the fixed costs of the business

Calculating breakeven

  • Breakeven is calculated using the formula

Break space Even space Point space space space space space space space space equals space space space space space space space space space space fraction numerator Fixed space Costs over denominator Contribution space per space unit end fraction

Worked Example

Selected cost and revenue data for Cannock Chase Glamping

 

£

Revenue per pod per night

95

Variable costs per pod per night

19

Annual fixed costs

55,000

Using the information in the table, calculate how many pods need to be occupied each month for Cannock Chase Glamping to break even

[4]

Answer:

Step 1: State the formula to calculate the breakeven point

Break space Even space Point equals space space space space space space space space space space space space space space space space space fraction numerator Fixed space Costs over denominator Contribution space per space unit end fraction space (1)

Step 2: Calculate the contribution

<img alt=”Contribution space equals space Selling space price space minus space Variable space cost space per space unit space space equals space £ 95 space minus space £ 19 equals space £ 76″ data-mathml=”<math ><semantics><mrow><mi>Contribution</mi><mo>&#160;</mo><mo>=</mo><mo>&#160;</mo><mi>Selling</mi><mo>&#160;</mo><mi>price</mi><mo>&#160;</mo><mo>-</mo><mo>&#160;</mo><mi>Variable</mi><mo>&#160;</mo><mi>cost</mi><mo>&#160;</mo><mi>per</mi><mo>&#160;</mo><mi>unit</mi><mo>&#160;</mo><mo>&#160;</mo><mspace linebreak=”newline”/><mspace linebreak=”newline”/><mo>=</mo><mo>&#160;</mo><mo>&#163;</mo><mn>95</mn><mo>&#160;</mo><mo>-</mo><mo>&#160;</mo><mo>&#163;</mo><mn>19</mn><mspace linebreak=”newline”/><mspace linebreak=”newline”/><mo>=</mo><mo>&#160;</mo><mo>&#163;</mo><mn>76</mn></mrow><annotation encoding=”application/vnd.wiris.mtweb-params+json”>{“fontFamily”:”Times New Roman”,”fontSize”:”18″,”autoformat”:true,”toolbar”:”<toolbar ref=’general’><tab ref=’general’><removeItem ref=’setColor’/><removeItem ref=’bold’/><removeItem ref=’italic’/><removeItem ref=’autoItalic’/><removeItem ref=’setUnicode’/><removeItem ref=’mtext’ /><removeItem ref=’rtl’/><removeItem ref=’forceLigature’/><removeItem ref=’setFontFamily’ /><removeItem ref=’setFontSize’/></tab></toolbar>”}</ann

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