paper 2 break even

Question 1

when does a business break even

Answer 1

when total cost of production = total revenue from sales

Question 2

how can a business use profit and loss information (3)

Answer 2

to calculate breakeven and forcast how much to produce or charge and forcast revenue

Question 3

how do you calculate breakeven output

Answer 3

total fixed cost/price - variable cost per unit

Question 4

how do figures in break even forecast help a business (4)

Answer 4

they will know how much to sell to make a profit
can help to negotiate a bank loan
make judgements about price
find expected profit

Question 5

why might forecast figures be different (4)

Answer 5

can be based on past and may turn out to be different to past as cost in future may change examples -
number of competitors in market may change - more competition
business may make a promotional offer at strt up or when launching new product - so price may change over time
costs of materials may change
price increase can lead to increase in revenue or a fall in sales