Mr Pryer’s Year 10 Classes
Break Even Song November 2011
Collated Best Version
Here’s a song to help our learning,
About what a business should be earning,
To cover all that is has been spending,
On it our exam grade is depending,
Look for where TR intersects with TC
And that is where the break even point will be
Aim for this to keep your business on track
Not make a loss, givin’ people the sack, yeah
Chorus
So what I’ve been asked to do
Is work out what we need in revenue
To stop us from making a loss
Because when we do it upsets the boss
I’m planning our business
I’m planning our business
Fixed costs divided by contribution
per unit, well that is the solution
To figure out the units you’re needin’
To make and sell ensuring you break even,
even…….
Chorus
So what I’ve been asked to do
Is work out what we need in revenue
To stop us from making a loss
Because when we do it upsets the boss
I’m planning our business
I’m planning our business
I’m planning our busineeeeeeeeeeeessssssssss
I’m planning our business
To work out exactly what the contribution is
Take variable cost per unit in running your biz
From the selling price you charge for your wares
It goes towards covering your fixed costs…..
If you have been making a loss lately
Its time to talk about the margin of safety
Current output minus breakeven
Make it positive and losses you’ll be leavin’… leavin’
Chorus
So what I’ve been asked to do
Is work out what we need in revenue
To stop us from making a loss
Because when we do it upsets the boss
I’m planning our business
I’m planning our business
I’m planning our busssssssssssssssiiiiinessssss
I’m planning our business…..
Want to break even, oh-oh
Want to break even, oh-oh
Want to break even……
MUSIC FADES OUT!
Bonus/Alternative Verses on Value of
Break Even as a tool
Now the break-even tool it has the bonus
Of providing a target for business owners
It’s simple to use and really concise
Can model changes like raising your price
Not losing money anymore
Making a profit is what I’m looking for
Sales - they are always on our mind
how many customers we must find, find….
Bonus Verses on Limitation of Break
Even
The break-even tool well it could be bad though
Assumes things happen that may not work out,
no
Only as good as research quality
Forgets what will happen in reality
Now Break Even comes with certain problems
It’s based on taking some assumptions
Like that you’ll sell all that you are making
And let’s be honest that is just faking