breakeven Flashcards
1
Q
The break even point is
A
The point at which revenue equals costs so your business is making neither a profit nor loss
2
Q
Revenue
A
- money into business through the sales turnover
- selling price x units sold
3
Q
Fixed costs
A
Costs that do not change with the level of output e.g rent
4
Q
Variable costs
A
- costs that do change with the level of output e.g more sales= more materials needed
- total variable costs = number of units sold x variable cost per unit
5
Q
Contribution
A
- looks at profit made on individual products
- selling price - variable costs per unit
6
Q
Break eve point =
A
Fixed costs / (selling price - variable costs)
7
Q
What is margin of safety
A
Difference between actual level of output and break even output
Current output level/ break even output level
8
Q
Limitations of break even
A
- assumes every product made is sold
- in a service business prices differ
- costs may increases and decrease
- only a best guess
- doesn’t take returns into consideration
- don’t account fr economic factors
9
Q
Sales volume
A
Sales revenue / selling price
10
Q
Sales revenue
A
Selling price x quantity sold
