Help please on Break-Even in sales revenue

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Anjelika
Anjelika Registered Posts: 8 New contributor 🐸
in AAT Level 3 (Level 6 in Scotland)
I'm getting confused please can someone explain to me an easy way to work out the break-even sales revenue. I thought it had something to do with the pv (profit volume) ratio.

Many thanks in advance.

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  • Spring Flower
    Spring Flower Registered Posts: 14 New contributor 🐸
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    hi,

    break even (in sales revenue) = Total fixed cost
    contribution per unit

    for instance, mr x sells for £50. it has a variable cost £30 pu. and total fixed cost are £40,000 p.a.

    to break even we want just enough contri to cover the total fixed costs of £40,000.

    each unit of salse gives contri of 50-30 = £20

    .
    . . = 40,000
    £20
    = 2000 units



    whereas, p/v ratio = contribution
    selling price = £20 X 100
    £50

    = 40%



    and is nothing to do while you calculating berakeven.
  • visha
    visha Registered Posts: 218 Dedicated contributor 🦉
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    look at this thread

    http://www.aat.org.uk/forums/showthread.php?t=18157
  • Anjelika
    Anjelika Registered Posts: 8 New contributor 🐸
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    It really is NO good at all - more help with Break -Even please

    Thank you guys for this, but no matter how much I try I keeping failing on this when doing past exam papers :crying:


    I don't know what to do now, I've been try for the last four days and still can't get it.

    What suggetions apart from never mind that's section 2 of the exam paper that you have failed the exam on, does anyone have?

    (I'm doing this all at home with no help from a college!)
  • renae
    renae Registered Posts: 76 Regular contributor ⭐
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    did you manage to figure out the break even sales? I went in to see my tutor, she gave me the formula...now it's just a case of memorising it!

    BEP: Fixed cost / contribution per unit

    contribution: sales revenue - variable cost

    Margin of safety = sales - break even point

    I am about to test these out as I struggle with this also.....WTS

    If anyone has an easier way....PLEASE SHARE

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