Break even Point

Variable cost

which change in the direct proportion to output, otherwise known as direct cost.

Fixed costs

costs which remain the same as output changes in the short run

Break even calculation:

BeP= Fixed costs/ Selling price - variable costs

Margin Safety

The amount by which output can be reduced without the business making a loss.

Contribution

The difference between selling price and variable costs.

Break even point

The point at which a business makes neither a profit nor a loss

Sales revenue

The value of goods or services produced and sold by the business.