Chapter 10 - Breakeven And Limiting Factor Analysis Flashcards
1
Q
What is the Contribution ratio?
A
It measures how much contribution is earned from each £1 of sales
2
Q
What is the CS Ratio formula
A
Total contribution / Total Revenue
3
Q
How to you calculate breakeven point in terms of sales revenue?
A
Fixed costs / contribution ratio
4
Q
What is the margin of safety?
A
The amount that anticipated sales can fall below budget before a business is no longer making profit.
5
Q
How do you calculate margin of safety
A
Budgeted output / breakeven output
