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Finance

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

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Finance

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  1. Finance

    June 2012
  2. Some seasoning opportunities…
  3. How many apps need to be sold to break even?
  4. 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)
  5. Calculate the profit or loss if 3,000 Apps are sold. Show your workings and the formula used (3 marks) Variable cost per unit x number of apps sold Profit = Sales revenue – total costs 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
  6. Assessthe 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)
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