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P6 M3 D3

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Break-even & Budgeting Report
(P6)
What is break-even?
Reach a point in a business venture when the profits are equal to the costs. There is a business term called the Break-even point. The break-even point is the point where the total revenue exactly matches the total costs and the business does not make a profit or a loss. The break-even point for each of the prices (£30, £35, £40) that ABC Computing Ltd is selling there stands for as follows: * £30 – To break-even they will have to sell 355 units. * £35 – To break-even they will have to sell 194 units * £40 – To break-even they will have to sell 133 units
The purpose of break-even is to regulate the minimum output that must be achieved in order to make a profit. It also gives you some sort of indication of the earning impact of a marketing activity. The break-even point is one of the simplest yet least used analytical tools in management. It helps to provide a dynamic view of the relationships between sales, costs, and profits.

Budgetary Problems * One of the main budgetary problems within not just ABC Computing Ltd, but many other businesses as well are the variable expenses These are the bills that can change month to month; this can make it very difficult to have an actual price on the expenses. A way that ABC Computing Ltd can manage their variable expenses much more efficiently is to monitor the costs constantly. What I mean by this is to always keep track of their finances and always find ways to cut costs, for instance broadband. * Another problem that has occurred within ABC Computing LTD is keeping track of the expenses that they have. They haven’t enforced their budget as it shows when calculating they’re prices for selling their products at £40. A way to improve on this is to stick to the budgets that they have set themselves and try to prevent themselves from exceeding

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