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Slide 1 Notebook
Tuesday 11 April 2023Registration
Respect yourself - Respect each other - Respect the environment
Starter
How many words can you find in the business term:
‘Break – even’?
Slide 2 Notebook
Tuesday 11 April 2023Registration
Respect yourself - Respect each other - Respect the environment
The Big Picture
Our lesson objective is…• To learn how to draw break – even charts
By the end of this lesson:• All students can differentiate between fixed and
variable costs• Most students can show costs on a diagram • Some students can calculate break even point
Slide 3 Notebook
Tuesday 11 April 2023Registration
Respect yourself - Respect each other - Respect the environment
Break even...
Firms spend money making their products. These are called costs.
Variable costs = Change depending on output
Fixed costs = remain the same no matter how much is produced
Slide 4 Notebook
Tuesday 11 April 2023Registration
Respect yourself - Respect each other - Respect the environment
Cost sort!
Fixed or variable costs?
Rent
Advertising
Maintenance of machinery
Managers’ salaries
Interest payments on loans
Electricity costs
Overtime pay
Raw materials
Slide 5 Notebook
Tuesday 11 April 2023Registration
Respect yourself - Respect each other - Respect the environment
Starter
Fixed costs Variable costs
RentAdverti
sing
Maintenance of machinery
Managers’ salaries
Interest payments on loans
Electricity costs
Overtime pay
Raw materials
Slide 6 Notebook
Tuesday 11 April 2023Registration
Respect yourself - Respect each other - Respect the environment
Sales revenue
Firms get money from selling their products. This is called sales revenue...
Slide 7 Notebook
Tuesday 11 April 2023Registration
Respect yourself - Respect each other - Respect the environment
Break even...
Break even is the point at which the sales are exactly the same as the costs.
Total costs = Fixed costs + variable costs
Sales revenue = Selling price x number of units sold
Profit = Sales revenue – total costs
Slide 8 Notebook
Tuesday 11 April 2023Registration
Respect yourself - Respect each other - Respect the environment
Evans Cricket Bats Ltd
Stage 1: Complete this table...
Output (No of cricket bats)
Fixed costs
Variable costs
Total costs Sales revenue
1,000 £40,000
2,000 £40,000
3,000 £100,000
4,000 £140,000
Slide 9 Notebook
Tuesday 11 April 2023Registration
Respect yourself - Respect each other - Respect the environment
Evans Cricket Bats Ltd
Check your answers...
Output (No of cricket bats)
Fixed costs
Variable costs
Total costs Sales revenue
1,000 £40,000 £20,000 £60,000 £35,000
2,000 £40,000 £40,000 £80,000 £70,000
3,000 £40,000 £60,000 £100,000 £105,000
4,000 £40,000 £80,000 £120,000 £140,000
Slide 10 Notebook
Tuesday 11 April 2023Registration
Respect yourself - Respect each other - Respect the environment
Stage 2: Showing costs on a graph...
Turn your paper so it is LANDSCAPE and copy this...
Cos
ts (
£)
Output (No of cricket bats)
1000 2000 3000 4000
Slide 11 Notebook
Tuesday 11 April 2023Registration
Respect yourself - Respect each other - Respect the environment
Showing costs on a graph...
Insert fixed costs
Cos
ts (
£)
Output (No of cricket bats)
1000 2000 3000 4000
Slide 12 Notebook
Tuesday 11 April 2023Registration
Respect yourself - Respect each other - Respect the environment
Showing costs on a graph...
Add in variable costs...
Cos
ts (
£)
Output (No of cricket bats)
1000 2000 3000 4000
Slide 13 Notebook
Tuesday 11 April 2023Registration
Respect yourself - Respect each other - Respect the environment
Showing costs on a graph...
Calculate total costs...
Cos
ts (
£)
Output (No of cricket bats)
1000 2000 3000 4000
Total costs
Variable costs
Fixed costs
Slide 14 Notebook
Tuesday 11 April 2023Registration
Respect yourself - Respect each other - Respect the environment
Showing revenue on a graph
Now add revenue to your graph....
Cos
ts (
£)
Output (No of cricket bats)
1000 2000 3000 4000
Total costs
Variable costs
Fixed costs
Slide 15 Notebook
Tuesday 11 April 2023Registration
Respect yourself - Respect each other - Respect the environment
Showing revenue on a graph
Now add revenue to your graph....
Cos
ts a
nd s
ales
re
venu
e (£
)
Output (No of cricket bats)
1000 2000 3000 4000
Total costs
Variable costs
Fixed costs
Sales revenue
Slide 16 Notebook
Tuesday 11 April 2023Registration
Respect yourself - Respect each other - Respect the environment
Break – even tasks...• Now have a go at the break – even exercise
sheets...
Slide 17 Notebook
Tuesday 11 April 2023Registration
Respect yourself - Respect each other - Respect the environment
Check your work
How did you get on?
No. sold
Sales Revenue
FixedCosts
VariableCosts
TotalCosts
Profit/Loss
0 £0 £200 £0 £200 (200)
10 £80 £200 £20 £220 (140)
20 £160 £200 £40 £240 (80)
30 £240 £200 £60 £260 (20)
40 £320 £200 £80 £280 40
Slide 18 Notebook
Tuesday 11 April 2023Registration
Respect yourself - Respect each other - Respect the environment
Review
What have you learnt today?