Break even Descriptions Flashcards
Variable Costs
Vary with the level of output eg raw materials.
Semi-variable costs
Parts of the cost stays the same and part varies in relation to the business activity eg a worker being paid a fixed rate but then also receiving overtime payments during busy periods.
Fixed costs
Do not vary with output eg rent
Total costs
Total costs are the total amount of money a business spends on making the goods.
Total revenue
Total amount of money coming in from sales
Total sales
the amount of sales made in a set time period can be expressed as a value or volume
selling price per unit
amount a customer pays for each unit bought
sales in value
sales expressed in monetary value eg £
sales in volume
sales expressed as a quantity
break even point
total revenue = costs ie no profit or loss made
contribution per unit
contribution per unit is the amount by which an individual unit sold exceeds its variable costs.
Margin of safety units
actual number of units sold over and above the break even point
margins of safety value
finding the safety margins as a value eg £
profit
this is the profit achieved using the margins of safety units
