Business & economics · Grades 9–12
Costs, contribution and opportunity cost · revision notes
Fixed cost is unchanged over the stated output range; variable cost changes with output in the specified model. Real classifications depend on time horizon.
Key ideas and conditions
Costs
Fixed cost is unchanged over the stated output range; variable cost changes with output in the specified model. Real classifications depend on time horizon.
Contribution
Unit contribution is price minus variable cost per unit. Break-even units cover fixed cost and should be rounded upward when whole units are required.
Opportunity cost
Choosing one feasible option forgoes another. The value of the next-best alternative belongs in decision reasoning.
Scope
These are simplified educational models, not personalized financial advice or forecasts of a real business.
Explain without looking
- Name two assumptions behind a simple break-even calculation.
- Contribution is 5 per unit and 40 units sell. Find total contribution.
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