COST ACCOUNTING
BREAK EVEN POINT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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how much profit they will earn after they break even
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which products they should purchase for resale
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which costs are variable and which are fixed
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how many products they must sell to break even
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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. Here’s What We’ll Cover: What Is the Break-Even Point?
Detailed explanation-2: -Break-even Sales = Total Fixed Costs / (Contribution Margin) Contribution Margin = 1-(Variable Costs / Revenues)
Detailed explanation-3: -Break-even analysis tells you how many units of a product must be sold to cover the fixed and variable costs of production. The break-even point is considered a measure of the margin of safety. Break-even analysis is used broadly, from stock and options trading to corporate budgeting for various projects.
Detailed explanation-4: -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-5: -Your Break-even Formula For example, if your fixed expenses are $10, 000 and you sell a product for $100 that has a per-unit variable cost of $45, you would perform this calculation: 10, 000 divided by (100 minus 45). This comes to 181.81 products, which you can round up to 182 products you must sell to break even.