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5 cards from this section. Quick, good the night before a test.
Define Break-even Point.
What happens when a business covers all its expenses?
What do fixed costs represent?
Think about rent or salaries.
What is the Break-even Point?
Think about when a company is making no money or losing money.
True or False: Fixed costs change with production levels.
Think of rent; does it change if you manufacture more or less?
A sushi restaurant incurs fixed costs of ₹80,000 per month. The variable cost to prepare a single sushi plate is ₹200, and the selling price is ₹500. Calculate the Break-even Point in units and the Margin of Safety if the restaurant sells 1,000 plates in a month.
Transform costs into quantities; think about their implications on quantity sold.
A tech startup decides to launch a new app with fixed costs of ₹120,000 and variable costs of ₹150 per download. The app will sell for ₹300. Calculate the BEP in ₹, and discuss how the Margin of Safety would impact their pricing strategy.
How much do they need to bring in to start generating profit?
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