# Break - Notatki - Język angielski, Notatki'z Język Angielski. University of Warmia and Mazury in Olsztyn

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Notatki przedstawiające zagadnienia z zakresu języka angielskiego: define and calculate break.
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a) (i) Define break - even point

Break - even point is when the total sales from products or services are equal to total cost incurred by the business. There are three ways to calculate the break – even point: table, graph and formula.

a) (ii) Calculate the break – even point using formula

Fixed cost Break – even point = ------------------------------------------------ Selling price – variable cost per unit Fixed cost = £250.00 Variable cost = £ 0.70 Selling price = £ 1.50 Contribution = £ 0.80 250.000 Break – even point = -------------------------- 1.50 – 0.70 250.000 = ------------------------- 0.80

= 312.500 cards

b) Draw break even chart, showing clearly the break even point and the margin of safety at a sales level of 450.000 units Whitehouse Crafts activity table Number of card sold 0 250.000 500.000

Fixed cost 250.000 250.000

250.000 250.000

Variable cost £ 0.70

0 175.000350.000

Total cost

250.000 425.000 600.000

Total sales £1.50 0 375.000 750.000

c) Calculate profit / loss from sales of 400.000? Show this on the graph. Whitehouse Crafts activity table Number of cards sold 400.000 500.000

Fixed cost £ 250.000 250.000 250.000

Variable cost £ 0.70 280.000 350.000

Total cost 530.000 600.000

Total sales £ 1.50 600.000 750.000

Profit 70.000 150.000

If the Whitehouse Crafts sell 400.000 cards they will make a profit of 70.000

d) From break – even chart calculate the profit / loss if sales where 200.000

Whitehouse Crafts activity table Number of card sold 200.000 300.000

Fixed cost £ 250.000 250.000 250.000

Variable cost £ 0.70 140.000 210.000

Total cost 390.000 460.000

Total sales £ 1.50 300.000 450.000

Profit / Loss - 90.000 -10.000

If the Whitehouse Crafts sell 200.000 cards they will be making a loss of £90.000

e) What would be the impact of a drop in price from £1.50 to £1.40?

Fixed cost Break even formula = ------------------------------------------------- Selling price – variable cost per unit Fixed cost = £ 250.000 Variable cost = £ 0.70 New selling price = £ 1.40 Contribution = £ 0.70 250.000 Break even Point = ------------------------------ 1.40 – 0.70 250.000 = ---------------------------- 0.70 = 357,143 cards If the price drops from £1.50 to £1.40 per card the company will have to sell more to break – even. They will have to sell 357,143 thousands cards to reach break – even point , everything beyond that will be a profit. The customers might be more attracted to lower price and buy more , so the business might sell more in total and make bigger profit.

f) In addition to price drop ( in part e ) what would be the impact of an increase in labour cost to £10p ?

Fixed cost Break even formula = ------------------------------------------------- Selling price – variable cost per unit Fixed cost = £ 250.000 Variable cost = £ 0.72 New selling price = £ 1.40 Contribution = £ 0.68 250.000 Break even Point = ------------------------------ 1.40 – 0.77 250.000 = ---------------------------- 0.68 = 367,648 cards If the variable cost change to £0.72 per unit , the business will have to spend more to produce cards , as the price drops as well to £1.40 the break – even point will change to 367,648 cards and Whitehouse Crafts must sell more than that to make a profit.

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