BREAKEVEN TASKUsing the PowerPoint and any notes from

this lesson as well as the the text book complete the following in WORD:

1. Explain what breakeven is (p99)2. Show the formula used to calculate

breakeven (p104)3. Explain what margin of safety means

(103)4. Complete the Activity on page 1045. Explain why businesses use Breakeven

analysis (page 105)

CREATE A BREAKEVEN CHART FOR VIRGIN RACING Using MS Excel, produce a break even

chart for Virgin Racing, you must clearly show the break even point, area of profit and area of loss and the margin of safety on your chart. Construct the chart to show the break even

point for Virgin Racing that expects Average Prize Money = £100,000. Variable costs are £40,000 per race and fixed costs are £1,000,000.

INSTRUCTIONS TO DRAW THE GRAPH1. Highlight columns B,C (press and hold left hand mouse

button) D and E including headings 2. Click Insert>charts>2D-line 3. A graph should be created 4. Edit the graph by right clicking over the bottom (x) axis 5. Select format axis 6. In axis options click on tick marks (second from the

bottom) you may notice the coloured lines move left. 7. Now right click again on the numbers on the bottom (x)

axis 8. Choose Select data 9. In the right box click edit and a smaller window will open 10. Now highlight column A (not the heading) and press OK 11. Now you can annotate it

MERIT TASK In your second season there are now 30 races but the

Average Prize Money per race has decreased to £80,000, make these changes and save under a new name, again, clearly show the break even point, area of profit, area of loss and the margin of safety on your chart.

In your third season there are now 35 races; change your fixed costs to £750,000 and variable costs to £55,000 per race; re-save your chart under another new name, again, clearly show the break even point, area of profit, area of loss and the margin of safety on your chart.

Write an explanation to say what happened when these changes were input and what the result is now. Remember to mention how this will affect the business.

BREAKEVEN TASK1. Explain what has happened in your

change to graph 1 fully. i.e. When my average revenue per race decreased to £80,000…..this happened to my break-even point.

2. Explain what has happened in your change to graph 2 i.e when fixed costs decreased to £750,000 and variable costs increased to £55,000……..this happened to my break-even point.

3. Explain what the margin of safety is for graphs 1,2 and 3