Homework answers / question archive / Break-Even Analysis Assignment Kenneth and Hilda are planning to start a T-shirt business, and they want to know how many t-shirts they will have to sell to break even Information: Their fixed costs will be £200 • Their variable costs are £2 per T-shirt • They are going to produce 80 T-shirts • The selling price will be £10 Remember: Break-even Point = Fixed costs contribution per unit Contribution per unit = selling price - variable costs Activity: 1

Break-Even Analysis Assignment Kenneth and Hilda are planning to start a T-shirt business, and they want to know how many t-shirts they will have to sell to break even Information: Their fixed costs will be £200 • Their variable costs are £2 per T-shirt • They are going to produce 80 T-shirts • The selling price will be £10 Remember: Break-even Point = Fixed costs contribution per unit Contribution per unit = selling price - variable costs Activity: 1

Business

Share With

Break-Even Analysis Assignment Kenneth and Hilda are planning to start a T-shirt business, and they want to know how many t-shirts they will have to sell to break even Information: Their fixed costs will be £200 • Their variable costs are £2 per T-shirt • They are going to produce 80 T-shirts • The selling price will be £10 Remember: Break-even Point = Fixed costs contribution per unit Contribution per unit = selling price - variable costs Activity: 1. Using the information above, complete the table below. No. sold Variable Costs (5) Sales Fixed Revenue (£) Costs (E) 0 200 100 200 8.99 20 40 0 10 20 30 40 50 60 70 80 400 200 100 120 600 700 200 200 140 2. Using the table of data above, draw a break-even chart (on the back of this sheet). Your chart should show the total costs, revenue and break-even point. Be sure to include a title, label your axes, and label your lines (you may use a key or legend for this). Extra credit: show where the profit and loss lies & the margin of safety. 3. How many t-shirts do Kenneth and Hilda have to sell to break even? Show your calculations then evaluate whether the business is worth starting Break-Even Analysis Assignment Kenneth and Hilda are planning to start a T-shirt business, and they want to know how many t-shirts they will have to sell to break even Information: Their fixed costs will be £200 Their variable costs are £2 per T-shirt They are going to produce 80 T-shirts • The selling price will be £10 Remember: Break-even Point = Fixed costs / contribution per unit Contribution per unit = selling price - variable costs Activity: 1. Using the information above, complete the table below. No. sold Sales Fixed Revenue (£) Costs (8) 0 200 100 200 Variable Costs (£) 0 20 40 Total Costs (E) 200 220 Profit Loss (200) (120) 40 0 10 20 30 40 50 60 70 80 400 200 300 600 700 200 200 100 120 140 340 360 440 2. Using the table of data above, draw a break-even chart (on the back of this sheet). Your chart should show the total costs, revenue and break-even point. Be sure to include a title, label your axes, and label your lines (you may use a key or legend for this). Extra credit: show where the profit and loss lies & the margin of safety. 3. How many t-shirts do Kenneth and Hilda have to sell to break even? Show your calculations then evaluate whether the business is worth starting.