COST ACCOUNTING
BREAK EVEN POINT
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
dividends
|
|
|
sales revenue
|
|
|
return on investment
|
|
|
capital
|
Detailed explanation-1: -Revenue is the money a company earns from the sale of its products and services.
Detailed explanation-2: -Break-even point This is the point where your total revenue (sales or turnover) equals total costs. At this point there is no profit or loss-in other words, you ‘break even’. Knowing your break-even point can help you make a decision about your selling prices, set a sales budget and prepare your business plan.
Detailed explanation-3: -Assume a company has $1 million in fixed costs and a gross margin of 37%. Its breakeven point is $2.7 million ($1 million ÷ 0.37). In this breakeven point example, the company must generate $2.7 million in revenue to cover its fixed and variable costs. If it generates more sales, the company will have a profit.
Detailed explanation-4: -Examples of variable costs include raw materials, sales commissions, packaging and shipping, manufacturing labor, and credit card fees.