Evaluate the revenue and cost, Financial Management

Assignment Help:

a) TFC = $1,840 (Rent, Salaries, Admin + Power)

(b) BEQ = $1,840 / $16 = 115 child places

(c) Graph: Title; Axis labels; TR line; TC line and TFC line accurately drawn and labeled

(d) Graph: Breakeven point shown and Breakeven level of output shown

(e) Demand = 20 children per day * 22 days = 440
Safety margin = 440 - 115 = 325 child places (or a very safe 282%)
The safety margin must be clearly shown on the graph for maximum marks

(f) Strengths (application needed):

• It is easy to understand and quick to construct, especially for one product businesses such as Lisa Chan's Day-Care Centre.

• As a management decision making device, it can be used to study the impact of changes in the selling price, fixed costs or/and variable costs.

• It can be useful when a business desires to seek external finance, perhaps for expansion reasons, especially if it has a high MOS.

Weaknesses (application needed):

• Fixed costs do not necessarily remain steady, e.g. salaries and rent may increase

• Average variable costs are improbable to be constant due to economies of scale

• Prices are likely to be lowered (i.e. not remain constant) to attract greater demand

• Break-even analysis is a static model so the results are of limited use

• Revenue and Cost figures are based on estimates which may not prove to be accurate

 


Related Discussions:- Evaluate the revenue and cost

Ledgers, Ledgers: Ledgers record all the entries into the Cash Books. T...

Ledgers: Ledgers record all the entries into the Cash Books. They use the concept of 'double entry' bookkeeping where every ledger entry must be accompanied by another ledger e

What are the specefic control procedures of benchmarking, What are the spec...

What are the specefic control procedures of benchmarking Specific control procedures must be in place which include: O Organisational structure (clear lines of responsibilit

Explain implement budget-financial delegations, 1: How will you inform your...

1: How will you inform your managers and supervisors about budgets, reporting requirements and financial delegations? 2: What mechanism you will implement to ensure that there a

Examine the examples of political risk within countries, Examine the Exampl...

Examine the Examples of political risk within countries Outbreak of national war, unrest, civil war or riot. Nationalisation of industriesfor example confiscation of as

Define major causes for the current account deficits, The United States has...

The United States has experienced continuous current account deficits as the early 1980s. What do you think are the major causes for the deficits? What would be the results of cont

What are the merits of budgets?, Question 1 Describe the process involved ...

Question 1 Describe the process involved in accounting. What are the objectives of accounting? Question 2 Briefly explain the role of management accounting. Also expalin the

Corrective action on variance analysis, Corrective Action: Once budget ...

Corrective Action: Once budget figures are compared with those actually achieved, and a variance analysis carried out, management can then take steps to correct any problems id

What is affiliated company, Q. What is Affiliated Company? Affiliated C...

Q. What is Affiliated Company? Affiliated Company - Company or other organization related through common ownership,common control of management or owners or through some other

Define financial management, Financial management is that division of manag...

Financial management is that division of managerial process which is concerned with the planning and controlling of firm's financial resources. It is concerned with the procurement

What are the disclosure requirements, Disclosure requirements · Common...

Disclosure requirements · Common information about how operating segments were identified and types of products and services from which every operating segment derives its rev

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd