Breakeven and Margin of safety

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6 Terms

1
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What does breaking even mean?

when a business makes no profits or losses

2
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What is the formula for breakeven?

fixed costs/contribution per unit

3
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How do you work out contribution costs?

selling price - variable cost

4
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What is the margin of safety?

How much sales can drop before a business starts losing money

5
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Margin of safety unit formula

budget sales - breakeven sales

6
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Margin of safety percentage formula

budget sales - breakeven sales/budget sales x100