# breakeven

HideShow resource information
breakeven point
the point at which sales/revenue and total costs are the equal
1 of 11
breakeven calculation
fixed costs / contribution
2 of 11
contribution
selling price - variable costs
3 of 11
margin of safety
amount sales can drop before reaching the BEP (breakeven point)
4 of 11
fixed costs
not directly linked to the level of output (how much is produced) e.g. rent, insurance
5 of 11
variable costs
directly linked to the level of output (how much is produced) e.g. raw materials
6 of 11
margin of safety calculation
if current sales are 2000 and the BEP is 1200. the margin of safety will be 2000 - 1200 = 800 units
7 of 11
benefits of BEP
calculate the minimum sales needed to breakeven and prevent a loss
8 of 11
benefits of BEP
examine the impact of any changes of variable costs, fixed costs or selling price on the breakeven point
9 of 11
benefits of BEP
is worth while producing/ selling a particular good/service
10 of 11
limitations of BEP
estimates of sales/ costs may not be 100% accurate
11 of 11

## Other cards in this set

### Card 2

#### Front

fixed costs / contribution

#### Back

breakeven calculation

### Card 3

#### Front

selling price - variable costs

### Card 4

#### Front

amount sales can drop before reaching the BEP (breakeven point)

### Card 5

#### Front

not directly linked to the level of output (how much is produced) e.g. rent, insurance