3.3 Break-even analysis
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15 Terms
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level of output
Break- even: ________ at which total costs equal total revenue.
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Contribution
________ per unit: selling price of a product minus direct costs per unit.
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Margin of safety
________: amount by which the output level exceeds the break- even level of output.
4
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amount of revenue
Break- even revenue: ________ needed to cover both fixed and variable costs so that the business breaks even.
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Break-even
level of output at which total costs equal total revenue
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The graphical method
the break-even chart
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Margin of safety
amount by which the output level exceeds the break-even level of output
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Contribution per unit
selling price of a product minus direct costs per unit
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Total contribution
unit contribution x output
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Break-even revenue
amount of revenue needed to cover both fixed and variable costs so that the business breaks even
11
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Break-even
Level of output at which total costs equal total revenue
12
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Margin of safety
Amount by which the output level exceeds the break-even level of output
13
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Contribution per unit
Selling price of a product minus direct costs per unit
14
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Total contribution
Unit contribution x output
15
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Break-even revenue
Amount of revenue needed to cover both fixed and variable costs so that the business breaks even