6 - Break-Even Analysis Flashcards
1
Q
What do businesses use break-even analysis to predict?
A
The level of output to break-even
2
Q
What is meant by “contribution per unit”?
A
Revenue that covers fixed costs after variable costs have been taken away
3
Q
What is the formula for “contribution per unit”?
A
Selling Price Per Item - Variable Costs
4
Q
What is meant by “total contribution”?
A
Revenue that contributes to fixed costs once variable costs are taken away
5
Q
What is the formula for “total contribution”?
A
Total Revenue - Total Variable Costs
6
Q
What is the formula for “break-even analysis”
A
Total Costs = Total Revenue
