Page 110 - MAC4861_2 Costing Class Slides Part 1
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TEST 3 - COSTING
Overview
Why does a business have to calculate a break-even point?
• When you start a business you want to determine what
sales level is required for it to survive.
• For a typical start-up business, it is critical to ensure that
ongoing operating costs are covered by sales revenue in
the short-to medium-term.
• In the long-term, the business can focus on making a
profit. Once again the breakeven point and margin of
safety will indicate the riskiness or sensitivities of various
plans or strategies.
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