Break-even Analysis (pg 78-79)

sajidusu's version from 2016-04-13 05:39


Please answer these questions by clicking on the question marks:


Question Answer
What is the Break-even output?The Break-even output is the level of sales a busienss needs to cover its costs.
What is the equation for Contribution per unit?Contribution per unit = selling price per unit - variable costs per unit
How do you work out Total Contribution?Total Contribution = total revenue - total variable costs or contribution per unit x number of units sold
Where does contribution=fixed costs?The break-even output!
How do you work out the margin of safety?Margin of Safety = actual output - break-even output
One disadvantage of Break-even analysis.If the data is wrong, the results will be wrong.
One advantage of Break-even analysis.Its easy to do. If you can plot figures on a graph accurately, you can do break-even analysis.
Muneer Khan has a small restaurant. The average price per customer per meal is £13. The variable costs of materials and labour per meal are £5. The fixed costs of the restaurant are £1000 per mont. Calculate the break-even number of customers per month.125 customers

Recent badges