COST ACCOUNTING
BREAK EVEN POINT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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are sometimes short of working capital
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don’t have access to industry figures
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may have inexperienced employees
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don’t have past sales records
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Detailed explanation-1: -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. In other words, you’ve reached the level of production at which the costs of production equals the revenues for a product.
Detailed explanation-2: -The average variable cost is calculated as your total variable cost divided by the number of units produced. In general, lower fixed costs lead to a lower break-even point-but only if variable costs are not higher than sales revenue.
Detailed explanation-3: -A break-even analysis is a useful tool for determining at what point your company, or a new product or service, will be profitable. Put another way, it’s a financial calculation used to determine the number of products or services you need to sell to at least cover your costs.