Explain the break even point pricing, Managerial Accounting

Assignment Help:

Break even point or B.E.P. pricing method:

Break even point is the volume of sales at which the total sale revenue of the product is equal to its total cost. In other words, it can also be said that break even point is the volume of sales at which there is no profit and no loss. Therefore this method is also known as so profit no loss pricing method for the purpose of determining price under this method total cost of production of a product is divided into two part - fixed costs and variable costs.

The price is determined equal to the total cost of production of the product. It is based on the fact that in short-run the enterprise will not make any profit but in long-run it will start to earn profit and higher be the scale of production more will be the amount the fixed costs are recovered in the beginning the enterprise starts to get profit with the increase in sales above break even point. This method of pricing is very useful for determining the price of a competitive product. under this method B.E.P. can be calculated as under:

 


Related Discussions:- Explain the break even point pricing

Capital budgeting – planning investments, Project C would involve a current...

Project C would involve a current outlay of $50,000 on equipment and $15,000 on working capital. The investment in working capital would be increased to $21,000 at the end of the f

What are the advantages of cost accounting, What are the Advantages of cost...

What are the Advantages of cost accounting: 1. Cost accounting as an aid to management: cost accounting helps the management in carrying out of its functions, planning, organ

Determine abc system and service organizations, ABC System and service orga...

ABC System and service organizations The ABC system has been taken up as applied to a manufacturing organizations with the same efficiency. One basic characteristic of service

Transaction loans, These loans are given by the Banker for short periods fo...

These loans are given by the Banker for short periods for an exact activity like financing for a civil contract work. As the customer receives payment, the transaction will be repa

What are the disadvantages of budgetary control, What are the Disadvantages...

What are the Disadvantages of budgetary control 1) Uncertain future: the budgets are prepared for the future period. Despite best estimates made for the predictions may not

Example of cash discount, M/s ABC's present credit terms are 1/10 net 30 th...

M/s ABC's present credit terms are 1/10 net 30 that they are planning to change to 2/10 net 30.  The current average collection period is 20 days and the variable cost to sales rat

How the tax credit will affect price and quantity , 1. In order to boost th...

1. In order to boost the housing market throughout 2009 and into 2010, the federal government offered a tax credit to first-time home buyers and some repeat buyers.

Explain sales budget, Explain Sales budget A sales budget is an estimat...

Explain Sales budget A sales budget is an estimate of expected sale during a budget period. A sales budget is known as a nerve center or backbone of the enterprise. The degree

Planning, Planning A business must plan for its success. What do w...

Planning A business must plan for its success. What do we understand by business planning? It is about thinking in advance -- to decide on a course of the action to reach

Cost, Stellar Packaging Products and its primary customer, Estrella Coffee,...

Stellar Packaging Products and its primary customer, Estrella Coffee, are deciding on appropriate costing systems for their operations. Stellar Packaging Products’ manufacturing is

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