Breakeven Flashcards
What is the break-even analysis
The point at which production (sales/income) will cover expense (costs)
Total revenue = total costs
What does selling beyond break even lead to
Profit
Where is the break even point on the break even chart
The point where total revenue meets total costs
What is the equation for total income
Quantity produced (or sold) x selling price
What three aspects make up total cost
Variable
Fixed
Semi-variable
What are variable costs
Costs that increase as production (sales) increase
What are fixed costs
Costs that are fixed, regardless of number of products produced (sold)
What are semi-variable costs
Costs that contain a iced and a variable component
What are the steps to calculate break-even
- Identify the costs
- Determine the break-even point
Explain the mathematical method of break even point
Break-even point: total revenue = total cost
How do you calculate the break even quantity (x) in the mathematical method
Selling price (x) = variable cost(x) + fixed cost
How do you calculate the break-even sales (using the mathematical method0
Break-even quantity x selling price
How do you calculate the break-even quantity (x) using the accounting method
X= fixed costs/ (SP-VC)
Look at examples in break even slides
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