Break Even Point Flashcards
(16 cards)
Define Fixed Costs
Remain the same regardless of volume
Define variable costs
Increase in direct proportion to volume of sales (COGS, containers, delivery costs)
Define Semi-variable
costs which include both fixed and variable componets
Define Relevant range
Fixed cost are fixed over a range of sales volume
Define Break Even Analysis
Volume at which total revenue = total costs
No profit or loss
Produces only one product can be calculated in either dollars/sales or units of the product produced
Define Single Product
Only sells prescriptions or home IV company
Define Multiple product
Prescriptions + immunization + MTM
Plotting Break even graph
X and Y = dollars
X = sales
Y = costs/revenues
Total revenue line
Starts at 0 and goes up by a slop of 1
Total cost line
Determine two points and join them
Zero sales volume =
total costs = fixed costs
Finding the BEP
Total revenue line intersects the total cost line
Single: Average Variable Cost per prescription =
Total VC/# of RXs dispensed
Single: Total cost =
FC + Rx volume X average CV per Rx)
Multiple: Avg Rx Price =
Rx sales/# of Rxs
Multiple: Total Revenue =
Rx volume X Avg Rx Price
