2.2.3 break even

Question 1

break-even

Answer 1

point at which revenue equals cost so your business is making neither a profit nor a loss

Question 2

contribution formula

Answer 2

selling price per item - variable cost per item

Question 3

contribution to calculate profit formula

Answer 3

contribution per unit x sales quantity
total contribution - fixed costs

Question 4

break even formula

Answer 4

fixed costs / contribution

Question 5

margin of safety

Answer 5

difference between the break-even point and the current level of output

Question 6

margin of safety formula

Answer 6

production - breakeven

Question 7

limitations of break even

Answer 7

costs may increase
assumes every item is sold
only a best guess of what may happen