3.3 Break-even analysis

level of output

Break- even: ________ at which total costs equal total revenue.

Contribution

________ per unit: selling price of a product minus direct costs per unit.

Margin of safety

________: amount by which the output level exceeds the break- even level of output.

amount of revenue

Break- even revenue: ________ needed to cover both fixed and variable costs so that the business breaks even.

Break-even

level of output at which total costs equal total revenue

The graphical method

the break-even chart

Margin of safety

amount by which the output level exceeds the break-even level of output

Contribution per unit

selling price of a product minus direct costs per unit

Total contribution

unit contribution x output

Break-even revenue

amount of revenue needed to cover both fixed and variable costs so that the business breaks even

Break-even

Level of output at which total costs equal total revenue

Margin of safety

Amount by which the output level exceeds the break-even level of output

Contribution per unit

Selling price of a product minus direct costs per unit

Total contribution

Unit contribution x output

Break-even revenue

Amount of revenue needed to cover both fixed and variable costs so that the business breaks even