2.2.3 Breakeven

Question 1

What is contribution?

Answer 1

What someone pays for a product and what they sell it for

Question 2

How do you calculate contribution per unit?

Answer 2

selling price - variable cost

Question 3

What is total contribution calculation?

Answer 3

total revenue - total variable cost

Question 4

Breakeven point?

Answer 4

is where total costs are the same as total revenue

Question 5

calculation for total costs?

Answer 5

fixed costs + variable costs

Question 6

What is the breakeven output?

Answer 6

amount of output a firm needs so that total costs are the same as total revenue

Question 7

calculation for breakeven output?

Answer 7

contribution

Question 8

What does the breakeven chart include?

Answer 8

total costs and total revenue

Question 9

What axis is output measured on?

Answer 9

horizontal

Question 10

What axis is revenue, profit and costs measured on?

Answer 10

vertical

Question 11

What are 3 things that the breakeven chart show?

Answer 11

relationship between fixed costs and variable costs as output rises
level of output needed to breakeven
where a profit and loss are made

Question 12

3 limitations of breakeven analysis?

Answer 12

unpredictable events meant that results could be inaccurate
assumptions are made about future
may not be able to sell as much as it produces