2.2.3 Break Even Flashcards
1
Q
What is contribution?
A
What is the difference between the selling price and the cost to produce each item.
2
Q
Contribution formula
A
C= SP- Variable cost per unit
3
Q
Total contribution formula
A
Total contribution = contribution per unit x number of units sold.
4
Q
Profit formula
A
Profit= total contribution - fixed costs
5
Q
What is break even?
A
The point at which total revenue equals total costs
6
Q
What is margin of safety?
A
The difference between the break-even point and the current level of output
