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Break-Even Analysis

Fixed Costs
Contribution

(Contribution = Cost Price ­ variable cost)
Sales Revenue, Total costs and fixed costs can be plotted on a graph to show the level of break-even
output as well as the level of profits or losses at every possible level of revenue.



They will also…

Page 2

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NET (or OPERATING) PROFIT: Gross profit ­ (Expenses + Overheads)

E.g.

Revenue (turnover) Costs of goods sold
Gross Profit Expenses and overheads
Operating Profit Financing costs
Profit before taxation Taxation
Profit after taxation for the year

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