2.2 Sales And Breakeven

Question 1

Sales revenue and volume

Answer 1

Rev= price× quantity
Vol= value of units

Question 2

Fixed and variable costs

Answer 2

Don’t change w lev output eg rent
Vary w lev of output eg raw m
Semi v= electricity, delivery

Question 3

Formulas

Answer 3

Tc= fc + vc,
Vc= cost× quantity
Profit= total rev- total sales

Question 4

Break even point

Answer 4

Point where no profit or loss
Fixed costs ÷ sp-vc
Contribution = sp-vc
Total con= cper unit×q
Profit = total con-fc

Question 5

Margin of safety

Answer 5

Current lev of output - BEP

Question 6

Adv of bep

Answer 6

Asses if viable
Identify risks, sales, changes in lev of prod, intergal to seek finance
Quick,easy, lowers un costs

Question 7

Dis of bep

Answer 7

Human error, vc varies w output, assumes all output is sold, oversimp as trends aren’t accounted