COST ACCOUNTING
COST BEHAVIORS
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
|
|
|
|
|
|
|
|
|
|
Detailed explanation-1: -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. If you’re able to sell more units beyond this point, you’ll be making a profit.
Detailed explanation-2: -A company’s breakeven point is the point at which its sales exactly cover its expenses. Fixed Costs ÷ (Price-Variable Costs) = Breakeven Point in Units.
Detailed explanation-3: -The breakeven level is the number of units required to be produced and sold to generate enough contributions margin to cover fixed costs.
Detailed explanation-4: -Therefore, the concept of break-even point is as follows: Profit when Revenue > Total Variable Cost + Total Fixed Cost. Break-even point when Revenue = Total Variable Cost + Total Fixed Cost. Loss when Revenue < Total Variable Cost + Total Fixed Cost.