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Breakeven

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Breakeven

  • This topic has 1 reply, 2 voices, and was last updated 3 years ago by John Moffat.
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  • September 27, 2021 at 5:15 pm #636604
    Natasha1996
    Participant
    • Topics: 41
    • Replies: 25
    • ☆☆

    1) Is it true that Breakeven are units that cover the fixed costs of the company which means that over the breakeven units any sold will be a profit because the company has covered its fixed costs and over breakeven units we will be making contribution?

    2) I have read the definition of the Margin of Safety but unfortunately, I could not understand its meaning could you please tell me in other words for does it say?

    3) Contribution to Sales ratio (C/S ratio) is used to find out the revenue earned for Breakeven units and Target Profit?

    September 27, 2021 at 6:28 pm #636619
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54704
    • ☆☆☆☆☆

    1. Yes, that is true.

    2.The company will have budgeted their sales and will be expecting there to be a profit. However the budgeted sales might be wrong and the margin of safety is looking at how much it can be wrong by before the company makes a loss.

    3. Yes (although it is not the only way – it depends on the information given in the question).

    Have you watched my free lectures on this?

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