That Blue Square Thing

BTEC First Business - Unit 2 - Finance

Break-even Analysis

Learning Aim B1: Understand the planning tools businesses use to predict when they will start making a profit

Businesses need to know how much they need to sell to break-even. This is the point at which they make no profit and no loss - they break-even.

Planning effectively to identify this point is a really helpful thing for businesses to do.

The Break-even Chart

PDF iconBreakeven Charts - slides, including the basics of breakeven analysis

PDF iconLabelled Breakeven Chart - just the chart with some labels on it

PDF iconBreakeven Chart - an ambush assessment task!

The Break-even Formula

Once you can handle the chart you need to know how to use the Break-even Formula. Fortunately you don't need to remember the formula in the exam - it will always be given to you.

PDF iconThe Breakeven Formula - you don't need to remember this in an exam - but do need to know how to use it!

PDF iconPete's Pickles breakeven analysis - calculations to work through

Changes in the Break-even Chart

Changes in the Break-even Chart are quite tricky. I plan to produce some more materials to help revise this I think. For now, try this...

PDF iconChanges in the breakeven chart - a table to summarise changes which might occur and their impacts

Reasons for using Break-even Analysis

Once you're able to use the chart and the formula you need to understand the reasons for using them.

PDF iconBreakeven analysis - why it's important

PDF iconBreak-even analysis True/False to think about benefits and risks

PDF iconBreakeven analysis - a table to summarise the benefits and risks associated with it

The BBC Bitesize site has some notes on the breakeven chart and formula which are worth a look. There's a helpful test as well (although the questions dealing with "contribution" aren't something you need to know about).