Contents
Unit 3: Personal and Business Finance
Module objectives
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Objectives
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Cash flow forecasts
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Cash flow forecasts
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Preparing cash flow forecasts
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Using cash flow forecasting
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Benefits and limitations of cash flow forecasting.
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Case Study: External impacts on cash flow
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Break-even
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Break-even analysis
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Break-even forecast: Costs
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Revenue
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Calculating the break-even point
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Calculating a break-even point – using the contribution method
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Calculating the break-even point – using a break-even chart
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Identifying the area of profit, loss and the margin of safety
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Using a break-even chart
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Case study: Break-even
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Module 5: Cash flow forecasting and break even

Case study: Break-even

Asha Khan's bakery in Carmarthen is a successful local shop selling fresh bread and cakes. Asha is considering producing and selling vegan pasties.

Asha's cost estimates for the pasties are as follows:

Ingredients: £1.00

Production costs: £0.50

Fixed costs: £600

Asha thinks she will be able to sell around 300 pasties a month for £3.00 each.

Calculate how many pasties Asha needs to make to break-even.

Would it make sense for Asha to start producing pasties? Why?

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