Break-Even Units( X) = Total Fixed Costs( TFC)( Selling Price( P)-Total Variable Cost per Unit( V)
( e) Fixed Costs( FC): A Fixed Cost is a cost which cannot be easily identified or related to a cost per unit or activity of any kind for example a cost which remains constant when the production of a good or service within the organization rises or falls. Fixed costs include, but are not limited to: heating, lighting, depreciation on farm equipment, interest costs and rent. Sometimes called‘ indirect’ or‘ standing’ costs or simply overheads. Fixed costs do not depend on the number of units( e. g. number of trays of eggs sold).( f) Total Fixed Costs( TFC): The sum of the fixed costs.( g) Variable Costs( VC): These are costs that change when the production output changes. Variable costs include: feeds, labour, power, and fuel, veterinary, among others. Sometimes called‘ direct’ or‘ running’ costs. Variable costs vary with the number of units. For example, the more hens a farmer rears, the greater the feed cost.
( h) Total Variable Costs( TVC): These are the sum of the variable costs for the specified level of production or output.
( i) Average Variable Costs( AVC): Average Variable costs are the variable costs per unit of output or of TVC divided by units of output.
( j) Total Costs( TC): The sum of the total fixed costs and total variable costs. Total Cost( TC) = Total Fixed Costs( TFC) + Total Variable Costs( TVC).( k) Revenue is the price at which the item is sold( on a per unit basis).( l) Profit is the difference between total revenue and total cost.( m) Contribution to sales ratio( C / S ratio): Contribution to sales ratio( C / S ratio) allows a poultry farmer to understand the level of sales need to cover all costs of the project and what level of sales is needed to start making profits. C / S Ratio
= Contribution per Unit Sales Price per Unit
Or C / S Ration
= Total Contribution Total Sales Revenue
( n) Total Revenue( TR): This is the total amount of money a firm receives from selling goods or services. Total Revenue = Price per unit x Number of units sold.
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