break-even

Question 1

what are the types of cost?

Answer 1

-variable costs,
-fixed costs,
-total costs,

Question 2

what are variable costs?

Answer 2

costs which change depending on the level of output, e.g. the more a business is producing the higher the cost of electricity used.

Question 3

what are fixed costs?

Answer 3

costs which stay the same no matter how many units are produced, e.g. rent will have to be paid whether a business has 0 or 10000 units.

Question 4

what are total costs?

Answer 4

are the fixed and variable costs added together.

Question 5

what is the formula for calculating total profit?

Answer 5

total profit = sales revenue - total costs

Question 6

what is the formula for calculating selling price?

Answer 6

selling price = sales revenue / output

Question 7

what is ‘break-even’?

Answer 7

the point at which a company has sold enough products or services to have covered all there costs, they neither make any profit, nor do they make any loss

Question 8

what is required to calculate the point at which a company breaks even?

Answer 8

-The cost of raw materials.
-The cost of salaries.
-The costs of energy/electricity bills.
-Cost or advertising.

Question 9

what is the formula for calculating the break even point?

Answer 9

break even point = fixed costs / sales - variable costs