CIMA BA2 Breakeven analysis

Comments

1. yemisiewunuga says

   February 1, 2020 at 12:59 pm

   In his own formulated example..How is the contribution $2000 when it wasn’t given? He only stated that fixed cost is $2000

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   • Kim Smith says

     February 2, 2020 at 9:01 am

     To give it its full title “contribution” is “contribution to fixed costs and profit”.
     In other words, the excess of revenue over variable costs first goes towards covering the fixed costs – at the point at which this excess = fixed costs is the point of breakeven – and, thereafter, any further excess will be profit.

     The foundation of breakeven analysis is that:
     Sales revenue – variable costs (i.e. Contribution) = Fixed costs at the point of breakeven

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