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BE formulary

Break-even point is when the profit is 0, meaning the incoming money pays exactly for fixed and variable costs. q=units V=variable costs p= selling price V=v*q v= variable costs per Unit F=fixed costs C=F+v*q (total costs) break-even point= Fp-v to reach a certain profit= F+profit to reachp-v turnover= p*q contribution margin=p-v in % (p-v)/p contribution margin is the total sales minus variable costs

Safety margin expresses how much the turnover can decrease in order to be still over the break-even point.
Safety margin = Budgeted tournover-break-even turnoverbudgeted turnover×100%

High – low method to calculate fix costs

High price-low pricehigh product quantity –low product quantity=v

C-V (total costs – Variable costs) or C-v*q Proportional variable costs (1 Product 2€, 2 Products 4€) Progressive variable costs (1 Product 2€, 2 Products 2,10€) Regressive variable costs (1 Product 2€, 2 Products 1,90€) Indifference point: Level of production volume at which total costs are the same irrespective of production method Fa+va*q=Fb+vb*q Absorption costs: both fixed and variable costs are included in the costs per product. F based on capacity and V are based on actual production F/N+V/A (N=normal costs, A=actual costs) V/A=v Full production cost per unit Volume variance: (A-N)*(F/N) lProfit calculation: Gross profit+volume variance Gross profit= q*(p-c) c=costs per unit Checking: Total turnover – Total costs Direct costing: costs per unit consist only of the variable costs V=q*v Sales (q*p)-V=cm cm-F=operating income Difference in profit can result of difference in the value of the inventory, because with DC only the variable costs are calculated to the costs per unit. Direct costing: Sales (turnover) – variable costs (=total contribution margin) – total fixed costs...

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