Edexcel Business A Level Revision

Break even - is the point at which a business is not making a profit or a loss i.e. it is just breaking even. Break even output - Is the number of items that a business must sell to reach this point. Contribution - The contribution is the difference between the sales revenue and the variable cost of each unit sold or made. SELLING PRICE - VARIABLE COSTS Margin of Safety - is how much actual/current output is above the break even level of output Profit - ( MAX OUTPUT - Break even) x contribution or TR - TC Loss - TC - TR At break even point total costs must be the same as total revenue TR = TC  Before reaching break-even, the business is performing at a loss . After reaching break even, each additional unit sold will contribute towards a profit . CONTRIBUTION When a sale comes in, the sales revenue will be the amount the item was sold at - selling price. This amount will then be used to cover its own variable costs that went in to making the pro...

Sales volume - The amount of sales expressed as a number of units sold Sales revenue - is the amount of sales expressed as the total sum of money spent by consumers. Revenue is the money coming in from the sale of goods and services. Fixed costs - Fixed costs do not change as output varies.  In other words, they are fixed even if output moves up or down from period to period. Variable costs - Costs which change when output changes are called “variable costs” Total costs - Fixed costs + Variable costs Sales volume =Sales revenue / Selling price Sales revenue = selling price x quantity sold Total variable costs = number of units sold x variable cost per unit Total costs = Fixed costs + variable costs     This is what fixed, variable, total costs and revenue would look like on a graph   1) Revenue  Increases with the amount of units sold and therefore starts at 0 and slopes upwards when shown on a graph. 2) Fixed Costs  Fixed ...