E2 Break-even analysis Flashcards
1
Q
what is break-even?
A
the level of output at which the business is maing neither profit or loss.
total cost = total revenue
2
Q
what is contribution per unit?
A
the amount of money each unit sold
3
Q
what is the margin of safety?
A
the difference between the actual nmber of units produced and the number required to break-even.
the bigger the margin of safety, the greater potential for profit.
