COST ACCOUNTING
BREAK EVEN POINT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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amount of the business’s after tax-earnings
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total dollar value of the stock on hand
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total dollar sales needed to reach break-even
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amount the business can spend on new purchases
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Detailed explanation-1: -To calculate the break-even point in units use the formula: Break-Even point (units) = Fixed Costs ÷ (Sales price per unit – Variable costs per unit) or in sales dollars using the formula: Break-Even point (sales dollars) = Fixed Costs ÷ Contribution Margin.
Detailed explanation-2: -Break-even Sales = Total Fixed Costs / (Contribution Margin) Contribution Margin = 1-(Variable Costs / Revenues)
Detailed explanation-3: -The break-even point is the point at which total cost and total revenue are equal, meaning there is no loss or gain for your small business.
Detailed explanation-4: -A breakeven analysis is a calculation that tells small business owners what quantity of product must be sold to be profitable. It helps entrepreneurs come up with a pricing strategy that will not only cover costs but will generate a gross profit.