COST ACCOUNTING
BREAK EVEN POINT
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
Total Revenue = Total Costs
|
|
|
Fixed Costs = Total Revenue
|
|
|
Total Costs = Fixed Costs
|
|
|
Variable Costs = Total Revenue
|
Detailed explanation-1: -Your break-even point is equal to your fixed costs, divided by your average selling price, minus variable costs. It is the point at which revenue is equal to costs and anything beyond that makes the business profitable.
Detailed explanation-2: -A break-even graph shows a break-even point (BEP) visually. A break-even graph shows the revenue, costs, number of products sold and BEP.
Detailed explanation-3: -A firm’s break-even point occurs when at a point where total revenue equals total costs. Break-even analysis depends on the following variables: Selling Price per Unit:The amount of money charged to the customer for each unit of a product or service.
Detailed explanation-4: -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?