Break Even Point Flashcards
Define Fixed Costs
Remain the same regardless of volume
Define variable costs
Increase in direct proportion to volume of sales (COGS, containers, delivery costs)
Define Semi-variable
costs which include both fixed and variable componets
Define Relevant range
Fixed cost are fixed over a range of sales volume
Define Break Even Analysis
Volume at which total revenue = total costs
No profit or loss
Produces only one product can be calculated in either dollars/sales or units of the product produced
Define Single Product
Only sells prescriptions or home IV company
Define Multiple product
Prescriptions + immunization + MTM
Plotting Break even graph
X and Y = dollars
X = sales
Y = costs/revenues
Total revenue line
Starts at 0 and goes up by a slop of 1
Total cost line
Determine two points and join them
Zero sales volume =
total costs = fixed costs
Finding the BEP
Total revenue line intersects the total cost line
Single: Average Variable Cost per prescription =
Total VC/# of RXs dispensed
Single: Total cost =
FC + Rx volume X average CV per Rx)
Multiple: Avg Rx Price =
Rx sales/# of Rxs
Multiple: Total Revenue =
Rx volume X Avg Rx Price
