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.

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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

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3
Q

Define contribution

A

contribution is the amount of money left over after variable costs have been subtracted from revenue.

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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.

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