BUS 1000 Lecture Notes - Lecture 6: Negative Number, Cash Flow, Fixed Cost

• School: University of Denver
• Department: Business Core
• Course: BUS 1000
• Professor: Haag Stephen

Document Summary

The breakeven point is the point at which your sales volume has covered your fixed costs and your variable costs. Fixed costs are costs that will not change no matter how many units you sell: ex: rent, insurance, utilities. Unit selling price is the amount that you sell your products for per unit: ex: . 00 for each sale. Variable costs are the costs that vary with each unit that you sell: ex: the cost of each unit sold, commissions for part time employees. Contribution margin (cm) is the portion of your selling price that covers fixed costs. It is the unit selling price less the variable cost per unit. Selling price variable cost/unit = unit cm. Fixed cost/ unit cm = breakeven sales (units: /unit - /unit = unit cm, / = breakeven sales. On a graph: sales revenue meets total cost.