Break Even Analyse Essay example

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TASK A ( Ilustrate the use of budgets)

A budget is a financial plan which helps a business to see which are their incomes and their expenditures for different periods of time. The main objective of a budget is to provide information that enables the business to take control of their finances.
The purpose of a budget is to help the company manage their costs and their expenditures.
Managing costs is an important aspect of managing financial resources. Managing costs for a business are crucial because help the business to spend their money for what they need for the company.
A budget helps a business to establish efficient use of resources, help monitor cash flow and identify departures from plans and maintains a focus and discipline for those involved.
Sodor Café can use a budget by simply setting up one. The budget needs to be realistic, agreed, coordinated, challenging and flexible.
If they don’t use a budget they might have different problems like : they can have higher costs which maybe they can’t cover with sales so their company will be in loss.
TASK B( Costs and revenues for 2013 )
Figure 2

Annual sales / output of lunch Packs
Total variable cost (at £2.00 each)
Annual fixed cost
Total costs
Total revenue (selling price of £3.50 )
0
0
£40.020
£40.020
0
16.000
£32.000
£40.020
£72.020
£56.000
32.000
£64.000
£40.020
£104.020
£112.000
48.000
£96.000
£40.020
£136.020
£168.000
64.000
£128.000
£40.020
£168.000
£224.000
80.000
£160.000
£40.020
£200.020
£280.000

Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Total
Salaries
£1,085.00
£1,085.00
£1,085.00
£1,085.00
£1,085.00
£1,085.00
£1,085.00
£1,085.00
£1,085.00
£1,085.00
£1,085.00
£1,085.00
£13,020.00
Bank loan
£400.00
£400.00
£400.00
£400.00
£400.00
£400.00
£400.00
£400.00
£400.00
£400.00
£400.00
£400.00
£4,800.00
Equipment
£1,300.00
£1,300.00
£1,300.00
£1,300.00
£1,300.00
£1,300.00
£1,300.00
£1,300.00
£1,300.00
£1,300.00
£1,300.00
£1,300.00
£15,600.00
Insurance
£100.00
£100.00
£100.00
£100.00
£100.00
£100.00
£100.00
£100.00
£100.00
£100.00
£100.00
£100.00
£1,200.00
Rent
£2,100.00
£2,100.00
£2,100.00
£2,100.00
£2,100.00
£2,100.00
£2,100.00
£2,100.00
£2,100.00
£2,100.00
£2,100.00
£2,100.00
£25,200.00
Advertising
£150.00
£150.00
£150.00
£150.00
£150.00
£150.00
£150.00
£150.00
£150.00
£150.00
£150.00
£150.00
£1,800.00
Sundry expenses
£200.00
£200.00
£200.00
£200.00
£200.00
£200.00
£200.00
£200.00
£200.00
£200.00
£200.00
£200.00
£2,400.00

Total
£5.335.00
£5,335.00
£5,335.00
£5,335.00
£5,335.00
£5,335.00
£5,335.00
£5,335.00
£5,335.00
£5,335.00
£5,335.00
£5,335.00
£64,020.00
TASK C (Budgeted costs for the equipment and rent for 2014)
Figure 3

TASK D (Budgeted costs and revenues for 2014)
Figure 4

Annual sales / output of lunch Packs
Total variable cost (at £2.20 each)
Annual fixed cost
Total costs
Total revenue (selling price of £4.00 )
0
0
£64.020
£64.020
0
16.000
£35.000
£64.020
£99.220
£64.000
32.000
£70.400
£64.020
£134.420
£128.000
48.000
£105.600
£64.020
£169.020
£192.000
64.000
£140.800
£64.020
£204.820
£256.000
80.000
£176.000
£64.020
£240.020
£320.000

TASK E (Break-even point for 2013)
Figure 2

Break-even point : 26.680 units

The price for Pack lunch boxes (selling price/each) – The price
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