break even Flashcards
cost unit
the actual product being made
cost centre
an area of responsibility wear a cost can be charged
direct costs
a cost which can be identified directly with the making of a product
indirect costs
these cannot be seen or traced back to a product being made
variable costs
costs which change and vary with the number of units being produced
fixed costs
costs that remain constant and do not change with the level of production
prime cost
the total of direct materials direct labour and other direct expenses used to make a product… the first costs of the production process
why do businesses us break even analysis?
is producing or selling a certain product going to be profitable
how many units of a product need to be sold before any profit is made
what will the profit be at various levels of output
calculation- total costs
TC=FC+VC
contribution definition
the difference between selling price per unit and variable costs per unit. after all fixed costs have been paid contribution goes towards profit
calculation- break even
fixed costs/contribution
calculation- contribution
selling price-variable costs
definition- margin of safety sales revenue
difference between sales revenue at break-even point and actual sales revenue
definition- margin of safety units
difference beween units of output at break even point and actual units of output
calculation- MOS sales revenue
MOS=actual sales revenue-BEP sales revenue
