Break Even Flashcards
(7 cards)
1
Q
What is break even
A
When sales revenue is = to total costs
2
Q
What is margin of safety
A
The amount by which a business’s current level of production exceeds its break even level of output
3
Q
If total revenue is > total costs
A
Profit made
4
Q
It total revenue<costs
A
Business will make a loss
5
Q
If total revenue = total costs
A
Business will break even
6
Q
Advantages of break even
A
Provides evidence of planning future finances for banks
Shows the effects of changes in prices and costs
Need I more
7
Q
Disadvantages of break even
A
Assumes business sews all output produced
Some businesses operate in a dynamic market so the break even chart is less valuable
