Break-even Analysis

Front

Break even

Back

Front

Variable cost per unit

Back

Front

Variable costs

Back

Change directly with the number of products made, e.g., stock, wages. Variable costs = variable cost per unit x output

Front

Fixed costs

Back

Do not change at any level of output, e.g., rent, salaries.

Front

Total Costs

Back

The sum of all costs at any level of output. Total Costs = Fixed costs + variable costs

Front

Total Revenue

Back

Money earned by a business by selling products. Increases directly with the number of products sold. Total Revenue = Price x Output

Front

Profit

Back

Money left after all costs have been repaid. Profit = Total Revenue - Total Costs OR Total contribution - fixed costs

Front

Margin of Safety

Back

The difference between actual output and the breakeven output. Reduces the risk of making a loss. Margin of Safety = Actual Output - Break-even output.

Front

Contribution per unit

Back

Contribution per unit = Selling price per unit - variable cost per unit

Front

Total Contribution

Back

Total contribution = Contribution per unit x Quantity sold OR Total contribution = Total sales - total variable costs