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

Difference between balance sheet and income statement, (i) Describe the di...

(i) Describe the difference between the balance sheet and the income statement in financial statements of companies. (ii) Give two examples of intangible assets and two exampl

What is the overall purpose to the statement of cash flows, 1.    Provide...

1.    Provide at least three characteristics of a corporation (in your own words).   2.   The date on which a cash dividend becomes a binding legal obligation is known

Limitations of standard costing system, The use of standard costs can prese...

The use of standard costs can present a number of potential problems or disadvantages. Most of these problems result from improper use of standard costs and the management by excep

Estimate the appraisal, The Smiths decided to convert Ron's home into a fur...

The Smiths decided to convert Ron's home into a furnished rental house. After several minor repairs (touching up the paint, replacing screens, pressure-washing), the property was a

Operating cycle of a merchandiser, Explain and illustrate with your own exa...

Explain and illustrate with your own example the operating cycle of a merchandiser.   Explain and  illustrate the differences between a multiple-step income statement and a single

What will the bond sell, A 20-year bond pays a coupon of 8 percent per year...

A 20-year bond pays a coupon of 8 percent per year (coupon paid semi-annually). The bond has a par value of $1000. What will the bond sell for if the nominal YTM is: a) 10 per

Calculate the tax base of the interest received, Prepare answers to each of...

Prepare answers to each of the following questions.  Assume a tax rate of 30%. (i) Harry Ltd has a balance of prepaid rent in the balance sheet amounting to $100 000 as at 30 Ju

Effects of increasing fixed cost, Jones Company operates within a monopolis...

Jones Company operates within a monopolistically competitive industry. The estimated demand for its products is given by the following inverse demand function P = 1760 - 12Q

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