Break Even Analysis Flashcards
1
Q
What is the formula for total revenue?
A
Selling price X quantity sold
2
Q
How is total costs calculated?
A
Fixed costs + total variable costs
3
Q
What is the formula for profit?
A
Total revenue - total costs
4
Q
How is total contribution defined?
A
Sales revenue - total variable costs
5
Q
What is the formula for contribution per unit?
A
Selling price - variable costs per unit
6
Q
How do you calculate profit using contribution?
A
Contribution per unit x margin of safety
7
Q
What is the formula for the break even point?
A
Fixed costs / (selling price - variable costs)
8
Q
How is break even output calculated?
A
Fixed costs / contribution per unit
9
Q
What is margin of safety?
A
Actual output - break even output, or: Annual sales - break even level of output
