COST ACCOUNTING
FINANCIAL TERMINOLOGY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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It will help to gain funding from the bank as part of a business plan
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It assumes that all the output the business produces will be sold
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It will help to determine whether the business idea is viable
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It will help to determine the level of output needed to make a profit
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Detailed explanation-1: -The break-even analysis is used to examine the relation between the fixed cost, variable cost, and revenue. Usually, an organisation with a low fixed cost will have a low break-even point of sale.
Detailed explanation-2: -A break-even analysis is a financial calculation that weighs the costs of a new business, service or product against the unit sell price to determine the point at which you will break even. In other words, it reveals the point at which you will have sold enough units to cover all of your costs.
Detailed explanation-3: -Break-even analysis is a small-business accounting process for determining at what point a company, or a new product or service, will be profitable. It’s a financial calculation used to determine the number of products or services you must sell to at least cover your production costs.
Detailed explanation-4: -Breakeven analysis is useful for the following reasons: It helps to determine the change in profits if the price of a product is altered. It helps to determine the amount of losses that could be sustained if there is a sales downturn.