COST ACCOUNTING
BREAK EVEN POINT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Fixed costs, variable costs and sales
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Fixed costs, total costs and total sales revenue
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Variable costs, total costs and sales
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Total costs and sales
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Detailed explanation-1: -The red line represents the total fixed costs of $100, 000. The blue line represents revenue per unit sold. For example, selling 10, 000 units would generate 10, 000 x $12 = $120, 000 in revenue. The yellow line represents total costs (fixed and variable costs).
Detailed explanation-2: -Business revenue, costs and profits.
Detailed explanation-3: -To draw a break-even chart, we need to follow six steps: draw axes; draw a line indicating fixed costs; draw a line indicating variable costs; draw a line indicating total costs; draw a line indicating revenue; mark the break-even point.
Detailed explanation-4: -To compute a company’s breakeven point in sales volume, you need to know the values of three variables: Fixed costs: Costs that are independent of sales volume, such as rent. Variable costs: Costs that are dependent on sales volume, such as the cost of manufacturing the product. The selling price of the product1.
Detailed explanation-5: -A breakeven chart is a chart that shows the sales volume level at which total costs equal sales. Losses will be incurred below this point, and profits will be earned above this point.