Break-Even, Profit, Loss etc. Flashcards

1
Q

What is Sales revenue?

A

Income from selling goods & services over a period of time.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What are Fixed costs?

A

Costs that stay the same no matter how much is sold.

+Eg. rent, salary

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What are Variable costs?

A

Changes depending on how much is sold eg. raw materials, packaging

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What is Total cost?

A

fixed costs & variable costs set over a period of time.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What is Break even?

A

When neither a profit or loss is made

+ Total revenue = total cost

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is the Break even point?

A

The number of items/ units needed to cover total cost

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is a Break even chart?

A

A graph showing a company’s revenue and total costs at all possible level of output

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is Profit?

A

Difference between total revenue and total cost.

+If the figure is negative the business is making a loss

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is the Margin of safety?

A

Difference between what is actually sold and the break even sales point

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What is the equation for revenue?

A

Selling Price x quantity sold

[SPxQ]

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is the equation for Total cost?

A

Fixed cost + Variable cost

[FC + VC]

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is the equation for Profit?

A

Total revenue - Total cost

[TR - TC]

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is the equation for Break-even output?

A

Fixed cost/Sales Price - variable cost per unit

[FC/SP - VC(pu)]

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is the equation for Margin of safety?

A

Current sales - break-even sales

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

How do you work out the variable cost on a graph?

A

Variable cost x quantity sold

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

How do you work out the total cost on a graph?

A

[Variable cost x quantity] + Fixed cost

17
Q

How do you work out the total revenue cost on a graph?

A

Sales Price x Quantity

18
Q

What are the advantages of a break-even chart?

A
\+Helps set realistic targets
\+Helps raise money from banks
\+Provides good evaluation to assess if you are on target
\+Helps make pricing decisions 
\+Helps identify how to cover costs
19
Q

What are the disadvantages of a break-even chart?

A

+Only analyses one product
+If firms sell at different prices break-even constantly changes
+Doesn’t account for build up of stock or waste
+Does’t account the sell by date