COST ACCOUNTING
BREAK EVEN POINT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A statement about the break-even quantity, based on the actual figures for revenues and costs.
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A prediction about the break-even quantity, based on estimates of future sales revenues and costs.
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A prediction about the break-even quantity, based on past figures for sales revenues and costs.
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A statement about the break-even quantity, based on past figures for sales revenues and costs.
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Detailed explanation-1: -Break-even analysis entails calculating and examining the margin of safety for an entity based on the revenues collected and associated costs. In other words, the analysis shows how many sales it takes to pay for the cost of doing business.
Detailed explanation-2: -A break-even analysis is a financial calculation that weighs the costs of a new business, service or product against the unit sell price to determine the point at which you will break even. In other words, it reveals the point at which you will have sold enough units to cover all of your costs.
Detailed explanation-3: -The break-even point is the point at which total revenue is equal to total cost. At this point, the profit is zero. (A particular company neither makes nor loses money at this point).
Detailed explanation-4: -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-5: -Your break-even point is equal to your fixed costs, divided by your average price, minus variable costs. Basically, you need to figure out what your net profit per unit sold is and divide your fixed costs by that number. This will tell you how many units you need to sell before you start earning a profit.