COST ACCOUNTING
CAPITAL BUDGETING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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(Units Sold × Sale Price)-(Units Sold × Cost per unit)-SG&A-Depreciation = 0
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(Units Sold × Sale Price) + (Units Sold × Cost per unit)-SG&A-Depreciation = 0
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(Units Sold × Sale Price)-(Units Sold × Cost per unit) + SG&A + Depreciation = 0
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(Units Sold × Sale Price) + (Units Sold × Cost per unit) + SG&A-Depreciation = 0
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Detailed explanation-1: -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.
Detailed explanation-2: -EBIT Breakeven is calculated by finding the point where alternative financing plans are equal according to the following formula: (EBIT-I) x (1.0-TR) / Equity number of shares after implementing financing plan. I: Interest Expense TR: Tax Rate Formula assumes no preferred stock.
Detailed explanation-3: -Break-even point in units = Fixed costs ÷ Contribution margin per unit. Your break-even point in units will tell you exactly how many units you need to sell to turn a profit.
Detailed explanation-4: -To calculate break-even point based on sales in GBP: Divide your fixed costs by the contribution margin. The contribution margin is calculated by subtracting variable costs from the price of a product.