Role of break-even point in business

The group (Abdelrahman, Lankesh and Alvin) have learnt how essential the break-even point is in any business, as it marks the point at which revenue is the same as total costs. Income beyond this points (as long as costs don’t rise equally) will therefore generate the magic ‘P’ word – PROFIT!

As well as understanding what the break even point is, the students have been working on how to find the break even point within any organisation and, perhaps most importantly, ways in which it can be lowered. A lower break even point should lead to more…wait for it….PROFIT!

Many of our Business Studies students are also studying accounting. We linked the two subjects this week to demonstrate how important accurate accounting data is in finding the break-even point, and worked through using the different ledgers and cash books which are used to manage and analyse this data.

Having seen how much the students learned this week, and how they were able to put this knowledge to use to theoretically raise profits, I will be demanding at least 5% of any future profits they make using this information. It’s only fair…

Posted by:

Phil Scherb
Principal

About me

BA, (Hons) English Literature and Theatre. DELTA (M.A.) English Language Teaching

After completing my studies I lived and worked abroad for many years before settling down in Cambridgeshire. I have been teaching for over 20 years, and have a real passion for education and understanding and exploring the science behind how learning best takes place. I have been in education management for over 13 years and always want the college and each student to be the best that they can be. When I'm not at work, I enjoy making music (badly), writing (even worse), playing golf (terribly) and being besieged and harassed by my two small boys.

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