COST ACCOUNTING
COST VOLUME PROFIT ANALYSIS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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BEP calculation can be calculated using:
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Equation approach
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Evaluation approach
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Comprehensive approach
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Contribution Margin approach
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Explanation:
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: -Break-even price is calculated by using this formula = (Total fixed cost/Production unit volume) + Variable Cost per unit.
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