Unit 2 Business Resources
TASK 4 P6 M4 D1 D3
I will be illustrating the use of budget as a means of exercising financial control of Li’s business. I will
also be analysing the reasons why costs need to be controlled to budget in Li’s business. As well as
this I will be making evaluations regarding how managing resources and controlling budge costs can
improve the performance of a business such as Li’s Business.
Li’s initial break-even chart
Quantity 0 10 20 30 40 50 60
Fixed cost £40,000 £40,000 £40,000 £40,000 £40,000 £40,000 £40,000
Variable cost £0 £12,000 £24,000 £36,000 £48,000 £60,000 £72,000
Total cost £40,000 £52,000 £64,000 £76,000 £88,000 £100,000 £112,000
Revenue £0 £20,000 £40,000 £60,000 £80,000 £100,000 £120,000
Profit/loss £-40,000 £-32,000 £-24,000 £-16,000 £-8,000 £0 £8,000
A breakeven chart shows a business such as Li’s business, how well the businesses financial status is,
as it indicates if the business is running at a profit or a loss. From calculating the breakeven point
from a breakeven chart a business is able to see the number of goods needed to be sold in order to
breakeven, or what the businesses needs to do in order to make sales without profit meaning that
the businesses revenue will be equal to the costs of goods. The break-even figure is calculated from
fixed, variable and total cost, revenue and profit and loss. Businesses use a breakeven chart as a way
of budgeting this is important this method protects the businesses profit margin for the sales made
from each bicycle sold.
Financial statement – Cost and budgets of Li’s Business
Quantity 0 10 20 30 40 50 60 70 80 90 100 110 120
Fixed cost £80,00 £80,00 £80,00 £80,00 £80,00 £80,00 £80,00 £80,00 £80,00 £80,00 £80,00 £80,00 £80,000
0 0 0 0 0 0 0 0 0 0 0 0
Variable cost 0 £10,00 £20,oo £30,00 £40,00 £50,00 £60,00 £70,00 £80,00 £90,00 £100,0 £110,0 £120,00
0 o 0 0 0 0 0 00 00 0
Total cost £80,00 £90,00 £100,0 £110,0 £120,0 £130.0 £140,0 £150,0 £160,0 £170,0 £180,0 £190,0 £200,00
0 0 00 00 00 00 00 00 00 00 00 00 0
Revenue 0 £20,00 £40,00 £60,00 £80,00 £100,0 £120,0 £140,0 £160,0 £180,0 £200,0 £220,0 £240,00
0 0 0 0 00 00 00 00 0 00 00 0
Profit/loss (£80,0 (£70,0 (£60,0 (£50,0 (£40,0 (£30,0 (£20,0 (£10,0 0 £10,00 £20,00 £30,00 £40,000
00) 00) 00) 00) 00) 00) 00) 00) 0 0 0
From working out all the costs as shown in the chart above it is clear that in order for the business to
breakeven 80 bikes must be sold. However in comparison to Li’s initial breakeven which was to sell
50 bikes, it is more understandable for Li to expand his business further in order to meet customer
TASK 4 P6 M4 D1 D3
I will be illustrating the use of budget as a means of exercising financial control of Li’s business. I will
also be analysing the reasons why costs need to be controlled to budget in Li’s business. As well as
this I will be making evaluations regarding how managing resources and controlling budge costs can
improve the performance of a business such as Li’s Business.
Li’s initial break-even chart
Quantity 0 10 20 30 40 50 60
Fixed cost £40,000 £40,000 £40,000 £40,000 £40,000 £40,000 £40,000
Variable cost £0 £12,000 £24,000 £36,000 £48,000 £60,000 £72,000
Total cost £40,000 £52,000 £64,000 £76,000 £88,000 £100,000 £112,000
Revenue £0 £20,000 £40,000 £60,000 £80,000 £100,000 £120,000
Profit/loss £-40,000 £-32,000 £-24,000 £-16,000 £-8,000 £0 £8,000
A breakeven chart shows a business such as Li’s business, how well the businesses financial status is,
as it indicates if the business is running at a profit or a loss. From calculating the breakeven point
from a breakeven chart a business is able to see the number of goods needed to be sold in order to
breakeven, or what the businesses needs to do in order to make sales without profit meaning that
the businesses revenue will be equal to the costs of goods. The break-even figure is calculated from
fixed, variable and total cost, revenue and profit and loss. Businesses use a breakeven chart as a way
of budgeting this is important this method protects the businesses profit margin for the sales made
from each bicycle sold.
Financial statement – Cost and budgets of Li’s Business
Quantity 0 10 20 30 40 50 60 70 80 90 100 110 120
Fixed cost £80,00 £80,00 £80,00 £80,00 £80,00 £80,00 £80,00 £80,00 £80,00 £80,00 £80,00 £80,00 £80,000
0 0 0 0 0 0 0 0 0 0 0 0
Variable cost 0 £10,00 £20,oo £30,00 £40,00 £50,00 £60,00 £70,00 £80,00 £90,00 £100,0 £110,0 £120,00
0 o 0 0 0 0 0 00 00 0
Total cost £80,00 £90,00 £100,0 £110,0 £120,0 £130.0 £140,0 £150,0 £160,0 £170,0 £180,0 £190,0 £200,00
0 0 00 00 00 00 00 00 00 00 00 00 0
Revenue 0 £20,00 £40,00 £60,00 £80,00 £100,0 £120,0 £140,0 £160,0 £180,0 £200,0 £220,0 £240,00
0 0 0 0 00 00 00 00 0 00 00 0
Profit/loss (£80,0 (£70,0 (£60,0 (£50,0 (£40,0 (£30,0 (£20,0 (£10,0 0 £10,00 £20,00 £30,00 £40,000
00) 00) 00) 00) 00) 00) 00) 00) 0 0 0
From working out all the costs as shown in the chart above it is clear that in order for the business to
breakeven 80 bikes must be sold. However in comparison to Li’s initial breakeven which was to sell
50 bikes, it is more understandable for Li to expand his business further in order to meet customer
