5.2 contribution and breakeven Flashcards
1
Q
What is the equation for contribution?
A
total sales - total variable costs
2
Q
What is the equation for contribution per unit?
A
selling price per unit - variable cost per unit
3
Q
Where does breakeven occur?
A
Where contribution = fixed costs
4
Q
What is the equation for breakeven output
A
fixed costs / contribution per unit
5
Q
What is the margin of safety?
A
Difference between actual output and breakeven output
