ACC 212: Chapter 22 "Break-Even Analysis"

Since BEP is where you have zero profits, then: BEP Sales

VC+FC+0

break even points in units equation

fixed costs/ contribution margin per unit

break even point in dollars

fixed costs/ contribution margin ratio

at the break-even point, ______ _____ must equal total fixed costs

contribution margin

three different ways to compute break even

-from a mathematical equation, -by using contribution margin, or -from a cost-volume profit (CVP) graph

break-even point definition

-level of activity at which total revenues equals total costs -expressed either in sales units or in sales dollars

contribution margin ratio equation

Contribution Margin / Sales

mathematical break even equation

Sales = VC + FC + Net Income

contribution margin definition

amount of revenue left over to cover FC and contribute to Net Income

Gossen Company is planning to sell 200,000 pliers for $4 per unit. The contribution margin ratio is 25%. If Gossen will break even at this level of sales, what are the fixed costs? a. $100,000 b. $160,000 c. $200,000 d.$300,000

c.) $200,000

contribution margin equation

total sales(revenues) - variable costs