Show the break-even charts, Cost Accounting

Assignment Help:

Q. Show the Break-even charts?

Refers graphically profit and losses at different levels of sales volume achieved.

501_Show the Break-even charts.png

  • When sales revenue is greater than total cost it means that profits are being generated.
  • When sales revenue is less than total cost it means that losses are being incurred.
  • When sales revenue equals total costs (intersection of sales revenue lineand total costs line) it means that no loss or profit is occurring. This is break-even point.
  • Variable costs vary directly with output, as more output is produced then more variable costs are incurred.
  • Fixed costs don't vary with output and are constant for a range of output produced. They are incurred even when there is no output at the beginning of production. The reason behind this is they are costs which must be incurred to support manufacture like machinery or a warehouse.
  • Total costs line is a representation of combined variable and fixed costs. That is why at nil output it has a cost which signifies fixed costs, and then as output increases total cost line varies with it and in parallel with the variable cost line.
  • The margin of safety is extra amount of sales which is expected to be generated when budget or actual sales is compared to break-even level of sales.

Related Discussions:- Show the break-even charts

Definition of variance analysis, Definition of Variance Analysis Varia...

Definition of Variance Analysis Variance analysis can merely be defined like the process of analyzing the difference between the actual cost and the standard cost this variati

Administration costs budget, Administration Costs Budget This represe...

Administration Costs Budget This represents the costs of all administration expenses. Every department or budget centre will be responsible for the preparation of its own bud

Physical measure and net realizable value, Physical Measure and Net Realiza...

Physical Measure and Net Realizable Value Physical Measure/Unit Joint costs are assigned to the joint products according to the ratio of physical measurement of the outpu

Target profit and break even analysis, Lindon Company is the exclusive dist...

Lindon Company is the exclusive distributor for an automotive product that sells for $43 per unit and has a CM ratio of 35%. The company''s fixed expenses are $421,400 per year. Th

Find the predetermined overhead rate, Forbes Company uses a predetermined o...

Forbes Company uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. At the beginning of the period, the company estimated manufac

Cost accounting, Cost Accounting Cost accounting has been defined via ...

Cost Accounting Cost accounting has been defined via many accounting scholars in different forums. There is no single watertight definition of cost accounting, however the var

Create the consolidated statement of comprehensive income, Question ...

Question The statements of comprehensive income for three entities for the year ended 30 September 2009 are presented below: SOT PB UV

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