COST ACCOUNTING
COST VOLUME PROFIT ANALYSIS
Question
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Mathematical equation


Margin of safety


Contribution margin technique


Graphic presentation


HIgh low method

Detailed explanation1: Graphically Representing the Break Even Point The number of units is on the Xaxis (horizontal) and the dollar amount is on the Yaxis (vertical). The red line represents the total fixed costs of $100, 000. The blue line represents revenue per unit sold.
Detailed explanation2: Graphical Method: Shows a linear breakeven analysis. When price of a product remains the same, the organization expands its production, thus, total revenue is linear to the output. As shown in Figure17, TFC is equals to FE, which is a fixed cost line.
Detailed explanation3: How to calculate a breakeven point based on units: Divide fixed costs by the revenue per unit minus the variable cost per unit. The fixed costs are those that do not change no matter how many units are sold.
Detailed explanation4: 67 Three approaches to breakeven analysis are (a) the graphical method, (b) the equation method, and (c) the contribution margin method. In the graphical method, total cost and total revenue data are plotted on a graph. The intersection of the total cost and the total revenue lines indicates the breakeven point.