2.2.3 Flashcards
1
Q
Define BEP?
A
BEP is when total revenue for a product is equal to total costs of a product, making business operate at neither profit or loss.
2
Q
Formula of BEP
A
FC/SP-VC
3
Q
How to calculate contribution?
A
SP-VC
4
Q
What is MOS?
A
The difference between the actual level of output and the BEP
5
Q
2 Pros of BEP
A
Help obtain sources of finance
Motivate workers with clear targets
6
Q
2 Cons of BEP
A
Unrealistic assumptions ( No waste, All units sold no refunds)
Not all products will be sold at same price
