you are required to prepare a break even analysis loased on the following. 1.fixed cost remains at rs 12000/- 2.variable overhead cost will raise steadity from 0 to 12000/- 3 selling price rs500/- per ton 4. onnage produced and sold is 60 tons. .... plz guys help me i will definitely mark you as brainliest its hotel management question. ✌️✌️
Answers
Explanation:
A company breaks even for a given period when sales revenue and costs charged to that period are equal. Thus, the break-even point is that level of operations at which a company realizes no net income or loss.
A company may express a break-even point in dollars of sales revenue or number of units produced or sold. No matter how a company expresses its break-even point, it is still the point of zero income or loss. To illustrate the calculation of a break-even point watch the following video and then we will work with the previous company, Video Productions.
Before we can begin, we need two things from the previous page: Contribution Margin per unit and Contribution Margin RATIO. These formulas are:
Contribution Margin per unit = Sales Price – Variable Cost per Unit
Contribution Margin Ratio = Contribution margin (Sales – Variable Cost)
Sales
Break-even in units
Recall that Video Productions produces DVDs selling for $20 per unit. Fixed costs per period total $40,000, while variable cost is $12 per unit. We compute the break-even point in units as:
BE Units =
Fixed Costs
Contribution Margin per unit
Video Productions contribution margin per unit is $ 8 ($ 20 selling price per unit – $ 12 variable cost per unit). The break even point in units would be calculated as:
BE Units = Fixed Costs $40,000 = 5,000 units
Contribution Margin per unit $8
The result tells us that Video Productions breaks even at a volume of 5,000 units per month. We can prove that to be true by computing the revenue and total costs at a volume of 5,000 units. Revenue = (5,000 units X $20 sales price per unit) $100,000. Total costs = $100,000 ($40,000 fixed costs + $60,000 variable costs calculated as $12 per unit X 5,000 units).
Look at the cost-volume-profit chart and note that the revenue and total cost lines cross at 5,000 units—the break-even point. Video Productions has net income at volumes greater than 5,000, but it has losses at volumes less than 5,000 units.
A company breaks even for a given period when sales revenue and costs charged to that period are equal. Thus, the break-even point is that level of operations at which a company realizes no net income or loss.
A company may express a break-even point in dollars of sales revenue or number of units produced or sold. No matter how a company expresses its break-even point, it is still the point of zero income or loss. To illustrate the calculation of a break-even point watch the following video and then we will work with the previous company, Video Productions.
Before we can begin, we need two things from the previous page: Contribution Margin per unit and Contribution Margin RATIO. These formulas are:
Contribution Margin per unit = Sales Price – Variable Cost per Unit
Contribution Margin Ratio = Contribution margin (Sales – Variable Cost)
Sales