break-even Flashcards
how do you calculate break-even?
fixed costs / contribution
how is the break-even point expressed
in units
what does identifying the breakeven point mean for a business?
understand how many items it needs to produce and sell to cover all costs before it starts to make a profit
what is the margin of safety?
the difference between the actual level of output of a business and its break-even level of output
how do you calculate the margin of safety?
actual level of output - break-even level of output
what is a break-even chart?
a visual representation of the break even point
what is the break-even chart used to identify?
fixed costs, total costs and revenue
the break-even point
profit or loss
margin of safety
when is break even analysis less usefull?
when businesses produce more than one product
why is break-even analysis not always 100% correct?
assumes that all output is sold
why are break-even charts hard to maintain?
it is difficult to amend when conditions change
