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Break-even is when...
Total revenue = total costs
What is contribution per unit?
Selling price - variable cost per unit
What is the formula for break-even output?
Fixed costs ÷ contribution per unit
When a business is at break-even
what is the profit?
Zero
Which costs change with output?
Depreciation
Variable costs
Fixed costs
Overheads
Which costs stay the same even if output changes?
Labour costs
Variable costs
Fixed costs
Commission
A margin of safety shows...
How much output is above the break-even point
What happens if selling price increases (all other things stay the same)?
Variable costs rise
Break-even output rises
Fixed costs increase
Break-even output falls
What is total contribution?
Contribution per unit × number of units sold
What could cause break-even output to rise?
Increase in fixed costs
Decrease in selling price
Increase in variable costs
All of the above
Cash flow shows...
The movement of money in and out of a business
A cash flow forecast is used to...
Predict future cash inflows and outflows
What is a budget?
A plan of expected income and spending for a period of time
What is a variance in budgeting?
The difference between the budgeted and actual figures
What is an advantage of budgeting?
Increases revenue
Helps control spending
Stops competition
Guarantees profit
What is a weakness of budgeting?
Budgets may be unrealistic
Budgets guarantee success
Budgets reduce profit
Budgets increase costs
