Learning Outcome B Understanding how a business plans for success

Topic 3 (B.1) Understand the planning tools businesses use to predict when they will start making a profit

To answer all the 'online assessment' questions on this next topic on the course:

Learners should for a PASS (C):

• Be able to define break-even - the point that a business has made enough money through product sales to cover the costs of making the product (no profit and no loss)

• Be able to interpret (point out or identify) from a brake even chart: the 

• break even point
• profit
• loss
• variable costs
• fixed costs
• total revenue
• total costs
• margin of safety

• Be able to calculate the break-even (formula will be given in the given assessment) using method 1, 2 or both

Method 1 - Contribution Method   For a PASS


Break-even point    =                            total fixed costs
       (output)                    selling price per unit - variable cost per unit


Method 2 - The Break Even Point - (BEP) Graph Method or Seven Steps to Break Even Heaven click here

Learners should for a MERIT (B)

• Be able to analyse and explain the value and importance of break even analysis to businesses when planning for success 

• Analyse and explain the associated risks to a business of not completing a break-even analysis 

• Present given information graphically on a break even chart 

Learners should for a DISTINCTION (A)

• Analyse the effect on the break even point if sales or (fixed and variable) costs change, and explain the impact of these changes on the business 

Homework 3 Wk 3

That's all you need to know for topic three now test yourself here

Good luck and enjoy

NEXT STEPS in our next lesson - don't wait for Mr T and the other lazy slackers click here

Mr T

PS if you haven't bought a core text book the link here might be useful or alternatively you could get a second hand one or dare I say take a trip to use a free one in the library as they are ordering some for in there!