breakeven Flashcards
1
Q
breakeven
A
total revenue= total costs
when the business is making neither a profit nor a loss
2
Q
how is breakeven expressed
A
output
3
Q
contribution
A
selling price - variable cost
4
Q
breakeven point
A
fixed costs/ contribution
5
Q
margin of safety
A
safety net for the business before they start to make a loss
surplus of planned revenue
6
Q
how is margin of safety calculated
A
output - breakeven point
7
Q
limitations of breakeven
A
assumes you sell at full price only prediction TC could change assumes demand products share fixed costs tertiary business prices differ e.g bus assumes all output is sold may be inaccurately calculated assumes straight lines (may be stepped fixed costs)
8
Q
how is total contribution calculated
A
total revenue- total VC or
unit cont. x output
9
Q
how is profit calculated
A
total cont. - FC
10
Q
breakeven output
A
fixed costs/ contribution
