Revenue, costs, profits and cash. (Percentage change. (% increase=…
Revenue, costs, profits and cash.
Actual revenue- anticipated revenue= sales volume.
Sales revenue= sales price x sales volume.
Total cost/ number of units= average cost.
Total variable costs/ number of units= Average variable cost.
Total fixed costs / total number of units made= average fixed costs.
% increase= Increase / original number x 100
Contribution= selling price- variable cost/unit.
Break-even point: total fixed costs+ total variable costs= total sales revenue.
Contribution to calculate the break-even point.
Fixed costs/ contribution= break-even.
Margin of safety:
Amount of sales that are above the break-even point.
Actual (or budgeted) sales- break-even point/ sales= margin of safety (%).
Limitations of break-even analysis: