Break-Even Analysis Flashcards
0
Q
Contribution
A
The amount that each unit contributes towards covering fixed costs. Contribution = SP-VC
1
Q
Break-even output
A
The level of output at which the company is making no profit or loss; where total revenue = total costs
2
Q
Margin of Safety
A
The difference between actual output and break-even output assuming that the former is greater
3
Q
Sensitivity analysis
A
A technique which is used to try and reduce the uncertainty in decision-making. Decision makers will adjust a variable, eg. variable cost, to assess the impact of the change, eg. on the break-even output
