break-even

Question 1

what is a break-even?

Answer 1

when revenue from sales and costs are the same so there is no profit or loss

Question 2

why is break even important?

Answer 2

allows enterprises to work out how many products need to be sold to make a profit

Question 3

as break-even is important, why can an enterprise work out an appropriate pricing strategy?

Answer 3

they can ensure they cover their costs but also make a profit

Question 4

what are the 3 information that an enterprise must know to calculate the break-even?

Answer 4

1. sales price per unit
2. variable cost per unit
3. fixed costs

Question 5

what is the break-even point?

Answer 5

the number of units an enterprise will need to produce and sell in order to cover ts costs.

Question 6

break-even point:
what does it mean if an enterprise is one unit fewer or if its one more unit?

Answer 6

One unit fewer means the enterprise will make a loss, one more unit means it will make a profit.

Question 7

what is the formula for break-even?

Answer 7

break-even point = fixed costs / sales per unit - variable cost per unit