Breakeven analysis + limiting factor contribution Flashcards
1
Q
BEP (units)
A
BEP (units) = fixed costs / cont per unit
2
Q
BEP (£)
A
= total fixed costs / cont:sales ration
3
Q
Margin of safety
A
The amount by which actual sales can fall below budgeted sales without making a loss
BEP = 6000 units Budget = 8000 units
Margin of safety = 2000 units
4
Q
Target profits - how many units required
A
= fixed costs + TARGET PROFIT / cont per unit
5
Q
Charts: breakeven chart
A
Fixed cost line, total costs line, sales line
Can see breakeven point (total costs+sales overlap)
Profit - between sales and costs (after they’ve crossed)
BAD cannot see contribution
6
Q
Charts: cont breakeven line
A
Total costs line, variable costs line, sales line
See profit, breakeven point + contribution (difference between sales + variable costs)
7
Q
Charts - BAD
A
Time consuming Can only read for one product Assumes fixed costs dont change Assumes sales + variable costs are the same for every unit Assumes production = sales
