COST ACCOUNTING
BREAK EVEN POINT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Businesses calculate break-even in pounds so they know the
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amount of the business after tax-earnings.
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total pounds value of the stock on hand.
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total pounds sales needed to reach break-even.
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amount the business can spend on new purchases.
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Explanation:
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: -To calculate your break-even (units to sell) before net profit: Break-even (units) = overhead expenses ÷ (unit selling price − unit cost to produce)
Detailed explanation-3: -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.
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