Financial Management & Digital Accounting · Intermediate level

Intermediate level · Module 2 of 6 · 15 guided hours

Cost Behaviour and Break-Even Decisions

Use contribution and break-even analysis to make pricing and production decisions.

Learning objectives

  • Calculate contribution per unit and contribution margin
  • Calculate break-even volume and margin of safety
  • Use cost analysis for pricing and product decisions

Topics

  • contribution
  • break-even point
  • target profit
  • margin of safety
  • costing a product
  • pricing decisions

Lessons

  1. Lesson 1 Contribution and Break-Even

    Find how many units must be sold to cover all costs.

    selling pricevariable cost per unitcontributionbreak-even volume

  2. Lesson 2 Margin of Safety and Risk

    Measure how far sales can fall before the business makes a loss.

    margin of safetyoperating riskfixed cost structuresensitivity

  3. Lesson 3 Costing and Pricing Decisions

    Use full and marginal costs to price products and evaluate special orders.

    full costmarginal costspecial ordersspare capacity

Practical activity

Cost a tailoring workshop's school uniform, calculate break-even and target-profit volumes and advise on a bulk order.

Expected outcomes

  • Sound cost-based decisions
  • Clear break-even understanding

Assessment

Costing and break-even analysis with a recommendation, marked on accuracy and reasoning.

Taught live by an instructor — online or in person. Free course lessons are for self-study and do not lead to a certificate — see registration options.