COST ACCOUNTING
COST VOLUME PROFIT ANALYSIS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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there is a loss
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total sales revenue exceed total cost
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there is a profit
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both b and c
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Detailed explanation-1: -If your business’s revenue is below the break-even point, you have a loss. But if your revenue is above the point, you have a profit. Use your break-even point to determine how much you need to sell to cover costs or make a profit.
Detailed explanation-2: -an operating profit. If sales volume exceeds the break-even point, the firm will experience an operating profit. Firms will have fixed start-up costs that will absorb revenues exceeding variable costs.
Detailed explanation-3: -The break-even point does not change when sales change. It remains the point at which revenue covers variable and fixed costs without any profit or loss. A company experiences a profit if sales surpass the break-even point and a loss if sales drop below it.
Detailed explanation-4: -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.