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Theme 2
2.2 Financial planning
2.2.3 Breakeven
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Cards (3)
Breakeven - the level of output where total
revenue
is equal to the total
costs
(before the business starts to make profit).
Breakeven =
fixed costs
/
contribution
per unit.
Contribution per unit =
selling price
-
variable cost
per unit.
Margin of safety - the difference between the number of
sales
and the
breakeven
point.
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