# ECONOMICS

## COST ACCOUNTING

### COST VOLUME PROFIT ANALYSIS

 Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
Identify approaches to compute break even point.
 A Mathematical equation B Margin of safety C Contribution margin technique D Graphic presentation E HIgh low method
Explanation:

Detailed explanation-1: -Graphically Representing the Break Even Point The number of units is on the X-axis (horizontal) and the dollar amount is on the Y-axis (vertical). The red line represents the total fixed costs of \$100, 000. The blue line represents revenue per unit sold.

Detailed explanation-2: -Graphical Method: Shows a linear break-even 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 Figure-17, TFC is equals to FE, which is a fixed cost line.

Detailed explanation-3: -How to calculate a break-even 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 explanation-4: -6-7 Three approaches to break-even 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 break-even point.

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