Business Section: FinanceFurther Reading C.31 Keywords – break even, chart, margin of safety, contribution, contribution per unit. Class : Y11 Lesson Topic: Finance Scheme of Work: Break Even

Business Section: FinanceFurther Reading C.31 Keywords – break even, chart, margin of safety, contribution, contribution per unit.

Business Section: FinanceFurther Reading C.31 Keywords – break even, chart, margin of safety, contribution, contribution per unit. Lesson Objectives ALL (KNOWLEDGE) Define and describe and illustrate break even. MOST (ANALYSIS) Examine and Analyse the components of a break even chart SOME (EVALUATION ) Evaluate the pros and cons & Justify your views on the usefulness of a break even analysis. P&D Planning and Planning and Data Higher thinking Skills

Business Section: FinanceFurther Reading C.31 Keywords – break even, chart, margin of safety, contribution, contribution per unit. Planning Tools P&D Planning and Planning and Data

Business Section: FinanceFurther Reading C.31 Keywords – break even, chart, margin of safety, contribution, contribution per unit. KeywordDefinition Break even Break even chart Margin of safety Contribution Contribution per unit CONNECTIVES

Business Section: FinanceFurther Reading C.31 Keywords – break even, chart, margin of safety, contribution, contribution per unit. CONNECTIVES for Analysis CONNECTIVES for Application CONNECTIVES for Evaluation COMPARING Equally… As with… Like… In the same way… Similarly… Even so… Likewise… CAUSE & EFFECT Consequently…Due to… As a result…Therefore.. Because of…Because… CONCLUDING Firstly…After… Secondly…Before… Overall…I believe… Finally…I think … In conclusion…it depends… To conclude…short term… Meanwhile…Long term… CONTRASTING Although…Except… Moreover…If… However…Yet… Apart from…Unless… Despite…As long as… EMPHASISING Most importantly… Significantly… Notably… Especially… Above all… In particular… Indeed… QUALIFYING Despite…Yet… As long as…Unless… Apart from…If… Moreover…Except… However…Although… ADDING In addition…And… Too…Also… Additionally…As well as… Furthermore… ILLUSTRATING For instance…Such as… In the case of…So… For example… As revealed by… As illustrated by…

Business Section: FinanceFurther Reading C.31 Keywords – break even, chart, margin of safety, contribution, contribution per unit. What is break even? This is the stage when the costs of production are equal to the revenue. This means that the business does not make a profit at this stage, nor a loss. TR=TC.

Business Section: FinanceFurther Reading C.31 Keywords – break even, chart, margin of safety, contribution, contribution per unit. Break Even equation Fixed cost (Selling price-variable cost per unit) Price must cover your variable cost From what’s left you need to contribute to the Fixed Cost. Once you sell enough items to COVER all your fixed costs, break even is reached.

Business Section: FinanceFurther Reading C.31 Keywords – break even, chart, margin of safety, contribution, contribution per unit. Quick task? Can you draw FC VC TC TR curves On the same diagram ?

Business Section: FinanceFurther Reading C.31 Keywords – break even, chart, margin of safety, contribution, contribution per unit. Break even analysis Look like this?

Business Section: FinanceFurther Reading C.31 Keywords – break even, chart, margin of safety, contribution, contribution per unit. Break even task BE - Paj Holden

Business Section: FinanceFurther Reading C.31 Keywords – break even, chart, margin of safety, contribution, contribution per unit. What it is used for To estimate WHEN profit is made. Allows you to make judgements about prices and costs. Does price require a raise? Are costs to high? Are you contributing enough to Fixed costs, per item.

Business Section: FinanceFurther Reading C.31 Keywords – break even, chart, margin of safety, contribution, contribution per unit. TASK Draw break even chart on WB; What happens break even when? Price is higher (hint TR steeper) = break even reached sooner = moves left. Price is lower VC is higher FC is higher VC is lower

Business Section: FinanceFurther Reading C.31 Keywords – break even, chart, margin of safety, contribution, contribution per unit. The effects of changes in price and costs If price is higher, TR will be steeper and BE will move left If price is lower, TR will be flatter and BE will move right If FC are higher, TC will shift up, moving BE to the right If FC are lower, TC will shift down moving BE to the left If VC are lower, TC will be flatter and the BE will move to the left

Business Section: FinanceFurther Reading C.31 Keywords – break even, chart, margin of safety, contribution, contribution per unit. Limitations Figures are only estimated and so may turn out to be different. Figures only relate to one product. You assume that everything you make is sold. Depends on quality of data available.

Business Section: FinanceFurther Reading C.31 Keywords – break even, chart, margin of safety, contribution, contribution per unit. KeywordDefinition Break even Break even chart Margin of safety Contribution Contribution per unit CONNECTIVES

Business Section: FinanceFurther Reading C.31 Keywords – break even, chart, margin of safety, contribution, contribution per unit. Climb the Ladder A-A* 1.To what extent 2.Do you think 3.Evaluate whether (8-10m) 10+ connectives & key words C-B 1.Explain 2.Compare 3.Analyse (5-8m) 5+ connectives & key words E-D 1.Define 2.Describe 3.Identify (2-4m) 2 + connectives & key words ATD Apply to Apply to demonstrate

Business Section: FinanceFurther Reading C.31 Keywords – break even, chart, margin of safety, contribution, contribution per unit. Lesson Objectives ALL (KNOWLEDGE) Define and describe and illustrate break even. MOST (ANALYSIS) Examine and Analyse the components of a break even chart SOME (EVALUATION ) Evaluate the pros and cons & Justify your views on the usefulness of a break even analysis. P&D Planning and Planning and Data Higher thinking Skills

Business Section: FinanceFurther Reading C.31 Keywords – break even, chart, margin of safety, contribution, contribution per unit. Pass the Parcel Add as much information you can remember from today’s lesson When the horn blows – pass your sheet to the next table! R Review the Learning Review the Learning

Business Section: FinanceFurther Reading C.31 Keywords – break even, chart, margin of safety, contribution, contribution per unit. Neighbours 2 things your neighbour has learnt today 1 question your neighbour wants to ask R Review the Learning Review the Learning

Business Section: FinanceFurther Reading C.31 Keywords – break even, chart, margin of safety, contribution, contribution per unit. Summarise your learning today into a single tweet 140 characters Keep all of the information Tweet STOP R Review the Learning Review the Learning

Business Section: FinanceFurther Reading C.31 Keywords – break even, chart, margin of safety, contribution, contribution per unit. 1 question you need to ask 2 new things you learnt 3 pieces of information R Review the Learning Review the Learning

Business Section: FinanceFurther Reading C.31 Keywords – break even, chart, margin of safety, contribution, contribution per unit. 5 minutes... GO STOP