GCSE Business StudiesBreak Even COSTS COSTS are the money that a business has to pay out to keep the business running. Buying stock Paying Wages Telephone.

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Presentation transcript:

GCSE Business StudiesBreak Even COSTS COSTS are the money that a business has to pay out to keep the business running. Buying stock Paying Wages Telephone bills Rent

GCSE Business StudiesBreak Even TYPES OF COST Changes with number made Rent per month Wages per month Bank loan per month Advertising per month Insurance per month Raw material per item made YesNo YesNo YesNo YesNo YesNo YesNo Click the boxes – Once for ‘Yes’, twice for ‘No’ No Yes Check answers

GCSE Business StudiesBreak Even TYPES OF COST Fixed / Variable Rent per monthNo Wages per monthNo Bank loan per monthNo Advertising per monthNo Insurance per monthNo Raw material per item madeYes FixedVariable FixedVariable FixedVariable FixedVariable FixedVariable FixedVariable Click the boxes – Once for ‘Fixed’, twice for ‘Variable’ Fixed Variable Check answers

GCSE Business StudiesBreak Even A FIXED COST Does not change with the number being made or sold This does not mean that fixed costs can never change … e.g. your landlord may put your rent up the local council might put up the business rates the bank may put up the interest on your bank loan

GCSE Business StudiesBreak Even A VARIABLE COST Varies with the number being produced or sold Usual example is the raw material cost of what is being made.. e.g. a sandwich bar would have bread, butter, cheese, tuna, mayo, etc as variable costs because the cost of these things will be different depending on the number of sandwiches being sold….the more sandwiches sold the more bread the sandwich bar will have to buy.

GCSE Business StudiesBreak Even Jane makes soft toys in her spare time… …a very small business. Jane’s Costs: Bank Loan repayment £50 per month Materials £5 per toy Toys made each month Fixed Cost £ 50 Variable cost £ Total Cost £ Reveal answers

GCSE Business StudiesBreak Even Drawing the Cost Lines Fixed Cost Variable Cost Total Cost Click to select a marker and drag it to plot the graph Click the boxes to reveal the graph lines

GCSE Business StudiesBreak Even Jane’s Sales Jane sells her toys for £15 each This is known as her PRICE Toys sold each month Price £ 15 Sales Revenue £ Reveal answers

GCSE Business StudiesBreak Even Drawing the Cost & Revenue Lines Fixed Cost Variable Cost Total Cost Click to select the marker and drag it to plot the graph Total Revenue Break even point Break even output

GCSE Business StudiesBreak Even Drawing the Cost & Revenue Lines Fixed Cost Variable Cost Total Cost Total Revenue Break even output LOSS PROFIT Click here to show loss Click here to show profit