Break Even Flashcards
1
Q
What are fixed costs
A
Costs that always stay the same no matter what
2
Q
What are variable costs?
A
Change according to the quantity you make
3
Q
Examples of fixed costs
A
Salaries Leasing costs Business rent Business insurance Wages Business rate Advertising budget
4
Q
Examples of variable costs
A
Inventory Utility costs (per unit)
5
Q
Why do you need to know your break even
A
Helps set targets
Helps monitor the business success
Tells you if you are wasting your time
Helps you to justify borrowing money
6
Q
Break even formula
A
Selling price - variable costs = contribution
Fixed costs/ contribution
7
Q
Margin of safety
A
How many products you have sold over the break even point
