3.5.2 (3) break even Flashcards
1
Q
what is break-even output?
A
the number of items a company needs to sell to reach a point where they are no longer making a loss but have yet to make a profit.
2
Q
how do you calculate break-even?
A
fixed costs / contribution per unit
3
Q
what is contribution?
A
the difference between sales revenue and the variable costs of production
4
Q
what is contribution per unit?
A
the difference between the selling price of one unit and the variable cost of producing one unit
5
Q
how do you calculate contribution per unit?
A
selling price per unit - variable cost per unit
6
Q
how do you calculate total contribution?
A
contribution per unit x number of units sold
7
Q
what is the margin of safety?
A
the amount by which the existing level of output is greater than the break even point
