N4 Entrepreneurship & Business Management Step 5


Calculate the break-even point Break-even sales =


= R15 000 36.8%


= R40761 (rounded off )


Answer: The break-even point of CDs 4Africa when selling DVDs as well as CDs becomes R40761.


2.9.5 Graphic representation of the break-even point


Your break-even point can also be calculated by means of a graph. It involves three steps and will be explained by using the Steely Sam example again:


Important • You can calculate the break-even point of only one product;


• Your horizontal axis represents the number of units (tables);


• The vertical axis represents the Rand value. The 3 steps are:


1 Calculate and draw your fixed costs line: Fixed costs + profit = R2 000 + R 1 000 = R3 000


(AB)


Draw a line AB parallel to the horizontal X-axis (tables) to represent the fixed costs of R3000. You draw it parallel to the X-axis since your fixed costs stay the same whether you manufacture one or fifty tables.


Steely Sam wants to know what his break-even point is if he wants to make R1000 profit.


total fixed costs weighted average gross profit % 4


PAUSE FOR THOUGHT


The amount of discount allowed can’t be more then the mark-up of your product, unless you want to get rid of old stock or use it as a method to draw customers. Discount reduces your profit by the amount of discount that you allow.


6 000 8 000 10 000 12 000


2 000 4 000


A Fixed Costs E 20 60 100 140 X-Axis Tables 180 220 B


84


Y-Axis Sales – R


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