break even

Question 1

margin of safety calculation

Answer 1

actual output - break even output

Question 2

break even output calculation

Answer 2

fixed costs divided by sales price - variable cost per unit (contribution per unit)

Question 3

what unit does break even output need to be in

Answer 3

units

Question 4

calculate revenue at break even point (graph)

Answer 4

break even X sales price

Question 5

pros (2)

Answer 5

data can be used in a business plan which can help with getting sources of finance.
useful tool for management as it predicts break even output, margin of safety and can estimate profits telling managers how many products are needed to sell to not make a loss.

Question 6

cons

Answer 6

based on predicted data so unrealistic assumptions can be made as it assumes that no waste is made like refunds and also assumes the same price used for all products and also assumes all products which are made are sold.

Question 7

so what does it depend on

Answer 7

depends on the accuracy of the predicted data