Breakeven Flashcards
what is the breakeven point?
When total revenue and total costs are the same. Not making a profit or a loss.
breakeven point=
fixed costs/contribution (selling price-variable costs)
total revenue=
price x quantity sold
revenue=
price x quantity sold
margin of safety=
Actual sales - BEP
what does it mean if the margin of safety is positive?
the business is making a profit
what does it mean if the margin of safety is negative?
the business is losing money
gross profit=
sales revenue- Cost of sales (variable costs)
what are cost of sales also known as?
variable costs
net profit=
gross profit - other expenses (fixed costs)
profit=
sales revenue - total costs
total costs=
fixed costs + variable costs
variable costs (cost of sales)=
quantity sold x cost per item
total variable costs=
total quantity sold x cost of sales
fixed costs=
BEP x contribution
