COSTS GCSE Business Studies Break Even COSTS are

COSTS GCSE Business Studies Break Even COSTS are the money that a business has to pay out to keep the business running. • Buying stock • Paying Wages • Telephone bills • Rent

TYPES OF COST Click the boxes – Once for ‘Yes’, twice for ‘No’ Changes with number made Rent per month Wages per month GCSE Business Studies Break Even Bank loan per month Advertising per month Insurance per month Raw material per item made Yes No Yes No Check answers No No No Yes

Click the boxes – Once for ‘Fixed’, twice for ‘Variable’ TYPES OF COST GCSE Business Studies Break Even Fixed / Variable Check answers Rent per month No Variable Fixed Wages per month No Variable Fixed Bank loan per month No Fixed Advertising per month No Insurance per month No Raw material per item made Yes Variable Fixed Fixed Variabl e

A FIXED COST GCSE Business Studies Break Even Does not change with the number being made or sold This does not mean that fixed costs can never change… e. g. your landlord may put your rent up the local council might put up the business rates the bank may put up the interest on your bank loan

A VARIABLE COST GCSE Business Studies Break Even Varies with the number being produced or sold Usual example is the raw material cost of what is being made. . e. g. a sandwich bar would have bread, butter, cheese, tuna, mayo, etc as variable costs because the cost of these things will be different depending on the number of sandwiches being sold…. the more sandwiches sold the more bread the sandwich bar will have to buy.

Jane makes soft toys in her spare time… …a very small business. Jane’s Costs: Bank Loan repayment £ 50 per month GCSE Business Studies Break Even Materials £ 5 per toy Toys made each month Fixed Cost £ Variable cost £ Total Cost £ 0 1 2 3 4 5 50 50 50 0 5 10 15 20 25 50 55 60 65 70 75 Reveal answers

Drawing the Cost Lines Total Cost Click the boxes to reveal the graph lines GCSE Business Studies Break Even Fixed Cost Variable Cost Click to select a marker and drag it to plot the graph

Jane’s Sales Jane sells her toys for £ 15 each This is known as her PRICE GCSE Business Studies Break Even Reveal answers Toys sold each month Price £ Sales Revenue £ 0 1 2 3 4 5 15 15 15 0 15 30 45 60 75

Drawing the Cost & Revenue Lines Break even point Total Revenue Total Cost GCSE Business Studies Break Even Fixed Cost Variable Cost Break even output Click to select the marker and drag it to plot the graph

Drawing the Cost & Revenue Lines Click here to show loss Click here to show profit Total Revenue IT F PRO Total Cost GCSE Business Studies Break Even Fixed Cost LOSS Variable Cost Break even output