Currently Flashcards
Define break even ?
Total revenue matches total costs
(Business is not making profit or loss )
Marginal costs
Diffrent between break even and output
How to reduce fixed costs
Wages
Bills
Rent
Reduce staff
How to reduce variable costs
Cheaper raw materials
Increase selling price
Switch to cheaper supplier
Limitations of break even
Does not acknowledge changing conditions
Accuracy of data
Assumes sales price and costs are constant
Only works for one product at a time
Sets only a target
How to reduce break even
Reduce fixed and variable costs
And also increase selling price
How to increase entrapuneral capacity ?
Hire more staff
More machinery
More workers
Capacity?
Maximum amount a business can start to produce
Capacity utilisation ?
Amount of capacity a business is using
What is a sole trader
When a business has one owner
Advantage of a sole trader ?
Owner keeps all profits
Owner is in complete control
Business keeps all profits
What is the disadvantage of a sole trader ?
Unlimited liability
What does unlimited liability mean?
If the business fails the owner is liable for any business debts
Partner ships
Type of business that has 2 or more owners
Advantage of partenership
Able to share knowledge and experience
