miss duddigan-financial planning

Question 1

break even point

Answer 1

level of sales business needs to cover overall costs
fixed cots + total variable costs=total revenue

Question 2

what does a break even analysis do

Answer 2

tells business how much they need to sell to break even
anyone thinking of loaning money to business, may want to see break even analysis as part of business
plan
helps them decide whether to lend money to business
businesses also use to see how much profit they are likely to make, predict impact of new activity on cash flow

Question 3

contribution

Answer 3

difference in selling price and variable costs to produce it
contribution per unit=selling price-variable costs

Question 4

what it total contribution

Answer 4

contribution from all units sold
used to pay fixed costs