Break-even analysis iii |
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Break-even as a formula
We have already looked at undertaking break-even charts and graphs, but break even can also be calculated via the following formula:
Break-even point (in units) = Fixed costs / Contribution per unit
Contribution is the amount of money left over after variable costs have been subtracted from sales revenue. This is calculated via the following formula:
Contribution per unit = Selling price per unit - Variable Cost per unit
We have already looked at undertaking break-even charts and graphs, but break even can also be calculated via the following formula:
Break-even point (in units) = Fixed costs / Contribution per unit
Contribution is the amount of money left over after variable costs have been subtracted from sales revenue. This is calculated via the following formula:
Contribution per unit = Selling price per unit - Variable Cost per unit
Task 1
Test this formula for Daisy's bag business that we looked at in a previous lesson.
Test this formula for Daisy's bag business that we looked at in a previous lesson.
Task 2
Undertake the activity sheet linked below.
Undertake the activity sheet linked below.
Plenary
Create revision materials for your upcoming end of unit test
Create revision materials for your upcoming end of unit test