- Created by: sian
- Created on: 20-03-15 08:24
Breakeven point is the number of units needed to be made and sold in order to make no profit and no loss
Formula for BEP = total fixed costs / contribution per unit
where contribution per unit = selling price per unit - direct cost per unit
When you calculate BEP you need to round up to the nearest whole number, as obviuosly you cannot make and sell half a unit of a product. Examiners like to catch you out with this.
The margin of safety measures how close you are to breaking even, this is calculated by..
Actual number of units made and sold minus the break evern quantity of units made and sold.