COST ACCOUNTING
BREAK EVEN POINT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Gemima’s dolls houses are very popular, she is considering setting her selling price to £55. If she does this what would happen to her break-even point?
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Would increase
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Would decrease
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Would stay the same
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Explanation:
Detailed explanation-1: -Here is how to caclulate break-even point: How to calculate a break-even point based on units: Divide fixed costs by the revenue per unit minus the variable cost per unit. The fixed costs are those that do not change no matter how many units are sold.
Detailed explanation-2: -Break-even can be helpful when a business wants to make decisions. It is particularly useful for making decisions about: New products – break-even can be used to predict how many units would need to be sold, and the business can judge whether this would be realistic based on their market research.
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