ENTREPRENEURIAL PLANNING
BUSINESS PLAN DEVELOPMENT
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
Profit and volume
|
|
|
Sales and expenses
|
|
|
Direct costs and indirect costs
|
|
|
None of the above
|
Detailed explanation-1: -On the vertical axis, the breakeven chart plots the revenue, variable cost, and the fixed costs of the company, and on the horizontal axis, the volume is being plotted. The chart helps in portraying the company’s ability to earn a profit with the present cost structure.
Detailed explanation-2: -A break even chart is useful for studying the relationship of cost, volume and profit. The chart is very useful for taking managerial decisions because it shows the effect on profits of changes in fixed costs, variable costs, selling price and volume of sales.
Detailed explanation-3: -Where the revenue line crosses the total cost line is the break-even point-costs and revenue are the same. Everything shown below this point is loss, and everything above it is profit.