IB BUSINESS MANAGEMENT: 5.5 BREAK EVEN FORMULAS

• What is the formula for break even quantity?


  $\frac{fc}{sp - avc}$
• How is contribution per unit calculated?


  $price \, per \, unit - variable \, cost \, per \, unit$
• What does total contribution represent?


  calculated as total revenue minus total variable cost.
• How is total contribution calculated?


  $contribution \, per \, unit \times number \, of \, units \, sold$
• What is the formula for profit?


  $tc - tfc$
• How is the break even point calculated?


  $fc - contribution \, per \, unit$
• What does margin of safety indicate?


  the difference between current output and breakeven output.
• How is total revenue calculated?


  $p \times q$
• What is the formula for total costs?


  $tfc +$$tvc$
• What does the equation $p \times q$ represent in relation to total costs?


  same as $tfc +$$tvc$.
• How is target profit output calculated?


  $\frac{fc + target \, profit}{contribution \, per \, unit}$
• What is the formula for break even revenue?


  $\frac{fc}{contribution \, per \, unit} \times price \, per \, unit$