3.2b Profit & Loss (Breakeven) Flashcards
What is break even?
The point at which the business revenue matches the total cost.
What is gross profit?
Amount of profit that a business makes on a product or service before the costs of producing and selling that product or services are deducted
What is an income statement?
A financial statement showing the amount of more earned and spent in a particular period and the resulting profit and loss
What is a stakeholder?
Anyone who has an interest in the activities of a business.
How are losses shown on an income statement?
They are shown in brackets.
How do you work out gross profit?
Sales revenue - costs of sales
How do u work out net profit
Gross profit - other operating expenses and interest
What is profit?
The amountof revenue left over once costs have been deducted
How do you work out break even points in units ?
Fixed costs/(sales price - variable)
How do you work out break even point in currency?
Break even point in units X sales price
Why do businesses use income statements?
Businesses use them to keep track of revenue and loss and to show whether they’re making a profit or a loss.
How do business stakeholders use income statements?
Stakeholders use it to measure the success and identify whether the business is meeting its financial targets.
How would you work out the total costs?
Total costs = Total fixed costs + total variable costs
What is a loss?
The amount left after after all costs have been deducted in negative numbers.
Using the following information, work out the total costs:
Fixed cost per unit - £2450
Variable cost - £1.25
Units sold - 342
342 x 1.25 = 427.5
427.5 + 2450 = £2877.50
Fixed cost = £2877.50
