Theme 2: Break even

Break-even output

The point at which a business's revenue covers total costs, resulting in neither profit nor loss.

Break-even analysis

Helps businesses make decisions on costs, prices, and expected profit by determining the level of output needed to break even.

Contribution

The difference between the selling price and variable cost per unit, used to calculate total contribution.

Variable costs

Costs that vary with the volume of goods produced, increasing as production volume increases.

Margin of safety

The difference between actual output and break-even output, indicating the buffer zone before losses occur.