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BREAK EVEN ANALYSIS
- Costs
- Variable
- Costs that do change with output
- Wages
- Wages
- Costs that do change with output
- Fixed
- Costs that do not change with output
- Bills
- Bills
- Costs that do not change with output
- Variable
- Break even formula
- Fixed costs divided by contribution
- Predicted profit from break even analysis
- (Output x contribution)-fixed costs
- (Output x contribution)-fixed costs
- Fixed costs divided by contribution
- Revenue
- The amount of money received
without calculating profit
- The amount of money received
without calculating profit
- Profit
- Total costs-Revenue
- The amount of money made
- Total costs-Revenue
- Margin of safety
- Output-break even point
- Output-break even point
- Graphs
- Limitations
- It
assumes
all outputs
are sold
and no
stocks are
held
- Cannot
cope with a
sudden
increase in
wages and
prices or
changes in
technology
- It
assumes
all outputs
are sold
and no
stocks are
held
- Uses
- Calculate in advance the level of
sales needed to break-even
- See how
changes in
output
affect profit
- Calculate in advance the level of
sales needed to break-even
Media attachments
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