Costings & Break Even Flashcards
1
Q
Explain variable costs
A
changes directly with to changes to activity but VC per unit always remains the same.
2
Q
Explain fixed costs
A
as activity increases/decreases, fixed cost stays constant but FC per unit changes.
3
Q
what is the break-even point
A
where total revenue equals total costs
4
Q
what is the contribution margin ?
A
the difference between sales revenue and variable costs
5
Q
what is the sales mix ?
A
how many units of each product will be sold relative to total units sold.
6
Q
what is Margin of safety ?
A
the level expected to operate above break even
7
Q
what happens to contribution margin $PU after hitting the break even point?
A
it becomes profit per unit
