Finance
June 2012
Some seasoning opportunities…
How many apps need to be sold to break even?
They expect to sell 3000 copies of its weather app. What is
the margin of safety?
Break even point = 1,250
Expected sales = 3,000
Margin of safety = expected sales – break even point
= 3,000 – 1,250
= 2,750 (sales can drop by this amount before they start to make a loss)
Calculate the profit or loss if 3,000 Apps are sold. Show your
workings and the formula used (3 marks)
Profit = Sales revenue – total costs
Variable cost
per unit
x number of
apps sold
Sales revenue = selling price x quantity sold
Sales revenue = £2 x 3,000
Sales revenue = £6,000
Total costs = Fixed costs + total variable costs
Total costs = £2,000 + (£0.40 x 3,000)
Total costs = £3,200
Profit = Sales revenue – total costs
Profit = £6,000 - £3,200
Profit = £2,800
Assess the extent to which break-even analysis is a
valuable tool in allowing Shiftyjelly to plan the success
launch of its new weather app (10 marks)