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 peso value of the stock on hand
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total peso 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: -Break-even Sales = Total Fixed Costs / (Contribution Margin) Contribution Margin = 1-(Variable Costs / Revenues)
Detailed explanation-2: -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-3: -Break-even point in units = Fixed costs ÷ Contribution margin per unit. Your break-even point in units will tell you exactly how many units you need to sell to turn a profit. If you’re able to sell more units beyond this point, you’ll be making a profit.
Detailed explanation-4: -To calculate your break-even (units to sell) before net profit: Break-even (units) = overhead expenses ÷ (unit selling price − unit cost to produce)