Edexcel Business Paper 2 Summer

Break-even analysis - A method of determining what sales volume must be reached before total revenue equals total cost Break-even formula break-even = total fixed costs / contribution per unit Contribution per unit formula contribution = selling price - variable cost Break-even analysis pros and cons Pros: - Useful for management, predicts break-even output, margin of safety, and estimate profits at different levels - Highlights the importance of fixed costs, lower fixed costs = lower b...