31 Break Even Flashcards
1
Q
Define margin of safety
A
margin of safety is the difference between the break even point and the current level of sales.
2
Q
Define break even point and how to calculate it
A
break even is a point when the business does production but has no profit and no loss.
(fixed costs/selling price) - variable costs
3
Q
Define contribution
A
contribution is the amount of money left over after variable costs have been subtracted from revenue.
4
Q
Define break even output
A
break even ouput is the output a business needs to produce so that its total revenue and total costs are the same.