A-level Business Studies Lesson 31 (3.5.2 L2)

Question 1

Contribution per unit

Answer 1

Selling price per unit - variable cost per unit.

Question 2

Total contribution

Answer 2

The difference between total revenue and total variable costs. Note that total contribution equals contribution per unit x units of output.

Question 3

Break-even output

Answer 3

The level of output at which total sales revenue is equal to total cost of production.

Question 4

Margin of safety

Answer 4

The difference between the actual output and the break-even output. The formula for calculation is actual output - break-even output.