Costs, revenue and breaking even Essay

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Costs, revenue and breaking even

INTRODUCTION

In this part of the coursework I will be looking at costs, revenue and breaking even. To do this we will have to work out our fixed costs, variable costs, expected total revenue, the amount of cars needed to break even and whether we make a profit or loss.

A Business Plan

Material and Equipment

Fixed costs

All of these materials and supplies will be bought from a local D.I.Y shop. * 4 sponges incl. 1 revolving sponge: - £32
* 4 buckets: - £10
* 4 scrubbing brushes for wheels: - £4
* Advertising Leaflets: - £5
* 4 chamois leather: - £12 Total fixed costs: - £63

Variable costs

The
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This table will show a break-even analysis for our middle price,
£3.50.

No. Of cars

f. Costs (£)

v. Costs (£)

t. Costs (£)

Revenue (£)

Profit/ Loss (£)

0

£63

0

£63

0

-£63

10

£63

£4.50

£67.50

£35.00

-£32.50

20

£63

£9.00

£72.00

£70.00

-£2.00

30

£63

£13.50

£76.50

£105.00

+£28.50

40

£63

£18.00

£81.00

£140.00

+£59.00

This shows that the number of cars we need to wash is about 21 to break even.

This last table will show a break-even analysis for our lower price at
£3.00 per car.

No. Of cars

f. Costs (£)

v. Costs (£)

t. Costs (£)

Revenue (£)

Profit/ Loss (£)

0

£63

0

£63

£0

-£63.00

10

£63

£4.50

£67.50

£30

-£37.50

20

£63

£9.00

£72

£60

-£12.00

30

£63

£13.50

£76.50

£90

+£13.50

40

£63

£18

£81

£120

+£39.00

This shows that the number of cars we need to wash is about 24 to break even.

Our questionnaire indicated that £3 to £4 is a fair price to wash their cars. At a cost of £3.00 per car we would need to wash 24 cars to break even, this
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