Break Even Analysis Equations Flashcards
1
Q
Break-EvenPoint(Units)=
Number of units needed to be sold to cover all costs.
A
(Selling price per unit - variable cost per unit) / fixed costs
2
Q
Break-EvenPoint(Revenue)=
Revenue needed to be sold to cover all costs.
A
Break even point units x selling price per unit
3
Q
ContributionperUnit=
How much each unit sold contributes toward covering fixed costs.
A
Selling price per unit - variable cost per unit
4
Q
MarginofSafety(Units)=
(Can also be expressed as a %)
The difference between actual sales and the break-even level of sales.
A
Actual sales - break even sales
5
Q
Profit=
(Using margin of safety)
A
Contribution per unit x margin of safety
