This presentation provides an overview of the key points in this chapter.

Note for tutors:

If you wish to print out these slides, with notes, it is recommended that,
for greater clarity you select the pure black and white option on the
PowerPoint print dialogue box.
This slide provides a practical example to illustrate why break-even
charts can be useful. Even at the start, students should appreciate that
if the break-even point is high (eg 500 ice creams to break even) the
project is far more risky than if the break-even point is low (eg 50 ice
creams to break even).
This first slide gives the basics, together with an example of a profit and
a loss. Students should realise that no business can survive making a
loss for any length of time (in the short term, they could perhaps borrow
if overall prospects were good).
This slide provides a practical example to illustrate why break-even
charts can be useful. Even at the start, students should appreciate that
if the break-even point is high (eg 500 ice creams to break even) the
project is far more risky than if the break-even point is low (eg 50 ice
creams to break even).
This slide provides a practical example to illustrate why break-even
charts can be useful. Even at the start, students should appreciate that
if the break-even point is high (eg 500 ice creams to break even) the
project is far more risky than if the break-even point is low (eg 50 ice
creams to break even).
This first slide gives the basics, together with an example of a profit and
a loss. Students should realise that no business can survive making a
loss for any length of time (in the short term, they could perhaps borrow
if overall prospects were good).
The total amount of income received by a business should be greater
than or at least equal to the total of the fixed and variable costs.
The break-even point indicates when the two are the same.
The total amount of income received by a business should be greater
than or at least equal to the total of the fixed and variable costs.
The break-even point indicates when the two are the same.
Students should understand that costs are incurred in every business.
The student handbook gives the example of a pizza outlet that has to
heat the building and pay business rates even if hardly anyone comes
for a meal. Every person who buys a meal causes additional costs
because of the ingredients in the food eaten.
Each cost could be discussed briefly in turn, emphasising why they are
either fixed or variable. The difference between labour (variable) and
staff (fixed) will need some explanation. Examples such as temporary
labour used to cover busy periods versus admin staff who have no
direct connection with the level of activity could be used to illustrate the
point.
The total amount of income received by a business should be greater
than or at least equal to the total of the fixed and variable costs.
The break-even point indicates when the two are the same.
The total amount of income received by a business should be greater
than or at least equal to the total of the fixed and variable costs.
The break-even point indicates when the two are the same.
This presentation provides an overview of the key points in this chapter.

Note for tutors:

If you wish to print out these slides, with notes, it is recommended that,
for greater clarity you select the pure black and white option on the
PowerPoint print dialogue box.
This slide provides a practical example to illustrate why break-even
charts can be useful. Even at the start, students should appreciate that
if the break-even point is high (eg 500 ice creams to break even) the
project is far more risky than if the break-even point is low (eg 50 ice
creams to break even).
Students obviously need to be familiar with the appearance of the
formula. The next stage is to practice using actual figures. Tutors may
wish to ask students to apply Toms figures to the formula before
showing the next slide. NB: Toms fixed costs were 100, his selling
price per ice cream was 1.50 and his variable costs per ice cream
were 50p.
Students should note that using the formula is a quick method of
calculating the break-even point, compared to drawing a chart.
However, this calculation does not indicate how much profit or loss
would be made for a particular level of sales.
Students obviously need to be familiar with the appearance of the
formula. The next stage is to practice using actual figures. Tutors may
wish to ask students to apply Toms figures to the formula before
showing the next slide. NB: Toms fixed costs were 100, his selling
price per ice cream was 1.50 and his variable costs per ice cream
were 50p.
Students obviously need to be familiar with the appearance of the
formula. The next stage is to practice using actual figures. Tutors may
wish to ask students to apply Toms figures to the formula before
showing the next slide. NB: Toms fixed costs were 100, his selling
price per ice cream was 1.50 and his variable costs per ice cream
were 50p.
This slide provides a practical example to illustrate why break-even
charts can be useful. Even at the start, students should appreciate that
if the break-even point is high (eg 500 ice creams to break even) the
project is far more risky than if the break-even point is low (eg 50 ice
creams to break even).
Students should note that using the formula is a quick method of
calculating the break-even point, compared to drawing a chart.
However, this calculation does not indicate how much profit or loss
would be made for a particular level of sales.
Students obviously need to be familiar with the appearance of the
formula. The next stage is to practice using actual figures. Tutors may
wish to ask students to apply Toms figures to the formula before
showing the next slide. NB: Toms fixed costs were 100, his selling
price per ice cream was 1.50 and his variable costs per ice cream
were 50p.
Students obviously need to be familiar with the appearance of the
formula. The next stage is to practice using actual figures. Tutors may
wish to ask students to apply Toms figures to the formula before
showing the next slide. NB: Toms fixed costs were 100, his selling
price per ice cream was 1.50 and his variable costs per ice cream
were 50p.
Students obviously need to be familiar with the appearance of the
formula. The next stage is to practice using actual figures. Tutors may
wish to ask students to apply Toms figures to the formula before
showing the next slide. NB: Toms fixed costs were 100, his selling
price per ice cream was 1.50 and his variable costs per ice cream
were 50p.
This slide provides a practical example to illustrate why break-even
charts can be useful. Even at the start, students should appreciate that
if the break-even point is high (eg 500 ice creams to break even) the
project is far more risky than if the break-even point is low (eg 50 ice
creams to break even).
Students should note that using the formula is a quick method of
calculating the break-even point, compared to drawing a chart.
However, this calculation does not indicate how much profit or loss
would be made for a particular level of sales.
This slide provides a practical example to illustrate why break-even
charts can be useful. Even at the start, students should appreciate that
if the break-even point is high (eg 500 ice creams to break even) the
project is far more risky than if the break-even point is low (eg 50 ice
creams to break even).
Students will have to be told that, in the time available, Tom thinks the
highest number of ice-creams he could sell is 300. This has determined
the horizontal line (axis) on the chart
Tom therefore knows that at 1.50 each, his maximum sales revenue
will be 450. This determines the vertical line (axis) on his chart.
The point at which the revenue line crosses the total cost line is called
the break-even point. This is found by drawing a line vertically
downwards to the horizontal axis. The distance between the total cost
line and the revenue line shows the loss which would be made at that
level of sales. After the break-even point, the difference between the
two lines represents profit. From the graph, students should be able to
calculate that Tom will lose 100 if he sells no ice-cream, yet could
make a maximum profit of 200. In addition, as 100 ice-creams is a
reasonable number to sell, the venture is worthwhile. The situation
would be different if it was a rainy day and his break-even point had
been 200 ice-creams!
Each cost could be discussed briefly in turn, emphasising why they are
either fixed or variable. The difference between labour (variable) and
staff (fixed) will need some explanation. Examples such as temporary
labour used to cover busy periods versus admin staff who have no
direct connection with the level of activity could be used to illustrate the
point.