Break-Even Point Analysis
Completion requirements
Read this text on break-even point analysis. It goes through the process of calculating the break-even point for cost analysis under different scenarios. Take notes on each of the following: define the break-even point, differentiate between fixed and variable costs, and write the formulas on how to calculate the break-even point, calculate the contribution margin, calculate the contribution margin ratio, and calculate the margin of safety.
Margin of Safety
Answer
1. D. Margin of safety is calculated as current revenue minus break-even revenue.