{"id":168,"date":"2023-03-02T09:27:10","date_gmt":"2023-03-02T09:27:10","guid":{"rendered":"https:\/\/blogs.glowscotland.org.uk\/glowblogs\/n4businessmanagement\/?page_id=168"},"modified":"2023-03-02T09:27:10","modified_gmt":"2023-03-02T09:27:10","slug":"break-even","status":"publish","type":"page","link":"https:\/\/blogs.glowscotland.org.uk\/glowblogs\/n4businessmanagement\/break-even\/","title":{"rendered":"Break Even"},"content":{"rendered":"

Most private sector businesses have the aim of making profit. To be able to make profit, the money made from selling products has to be more than the money paid out in expenses (costs):<\/p>\n

Profit = Sales \u2013 Expenses<\/strong><\/h3>\n

Businesses work out the break-even point to find out how many units of a product they have to sell before they start to make a profit. The break-even point is when:<\/p>\n

Total Costs \u2013 Total Revenue (the amount received from sales of products)<\/h3>\n

Types of Costs<\/span><\/h2>\n

Costs is another name for expenses; money going out of the business. We need to know about three types of costs: fixed, variable and total costs.<\/p>\n

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 <\/p>\n

Revenue<\/span><\/h2>\n

Revenue is the name given to the money that a business received through selling a product. The more sold, the higher the total revenue will be.<\/p>\n

Total Revenue = Selling Price x Units Sold<\/h3>\n

The business must pay all their costs before they can make a profit.<\/p>\n

Example:\u00a0 A business has costs of the following<\/strong><\/span><\/p>\n

Fixed Costs – \u00a312,000<\/p>\n

Variable Costs – \u00a318,000<\/p>\n

Then Total Costs will be \u00a330,000<\/p>\n