Assignment: Fixed Costs‚ Variable Costs‚ and Break-Even Point Exercise 10.1 During the sixth month of the fiscal year‚ the program director of the Westchester Home-Delivered Meals (WHDM) program decides to again recompute fixed costs‚ variable costs‚ and the BEP using the high–low method. Here are the number of meals served and the total costs of the program for each of the first six months: Month Meals Served Total Costs July 3‚500 $20‚500. August 4‚000 $22‚600. September 4‚200 $23
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her Break-even for one month‚ she needs to identify and calculate the following Firstly‚ Jane needs to gather all her products with their Cost Price (Variable Cost per item) as well as her Selling Price. By identifying each products’ selling price and cost price‚ Jane can determine the difference – The Profit. This helps establish her fixed costs in which are referred to as the direct costs of production. This ensures how many need to be made and sold to cover all of Jane’s fixed costs. Therefore
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PRACTICE QUESTIONS ON BREAK-EVEN ANALYSIS 1. A small firm intends to increase the capacity of a bottleneck operation by adding a new machine. Two alternatives‚ A and B‚ have been identified and the associated costs and revenues have been estimated. Annual fixed costs would be $40‚000 for A and $30‚000 for B; variable costs per unit would be $10 for A and $12 for B; and revenue per unit would be $15 for A and $16 for B. a) Determine each alternative’s break-even point in units. b) At what volume of
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#3 Break-Even Analysis Rob Holland Assistant Extension Specialist Agricultural Development Center September 1998 One of the most common tools used in evaluating the economic feasibility of a new enterprise or product is the break-even analysis. The break-even point is the point at which revenue is exactly equal to costs. At this point‚ no profit is made and no losses are incurred. The break-even point can be expressed in terms of unit sales or dollar sales. That is‚ the break-even units
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CVP ANALYSIS / BREAK EVEN ANALYSIS Break-Even Analysis Introduction Break-Even Analysis-Volume-Analysis is a systematic method of examining the relationship between changes in volume (that is output) and changes in Sales Revenue‚ Express and Net Profit. As a model of these relationships‚ Break-Even Analysis simpifies the real-world conditions which a firm will face. The objective of Break-Even Analysis is to establish what will happen to the financial results if a specified level of activity
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Break-even point is that point at which there is neither profit nor loss. It is at point costs are equal to sales. It is otherwise called as balancing point‚ neutral point‚ equilibrium point‚ loss ending point‚ profit beginning point etc. After BEP is achieved‚ all the further sales will contribute to profit. At BEP‚ Sales – Variable cost = Fixed costs. OR Contribution = Fixed costs. Break-even analysis Break-even analysis is an analytical technique that is used to determine the probable
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BREAK-EVEN POINT A company’s break-even point is the amount of sales or revenues that it must generate in order to equal its expenses. In other words‚ it is the point at which the company neither makes a profit nor suffers a loss. Calculating the break-even point (through break-even analysis) can provide a simple‚ yet powerful quantitative tool for managers. In its simplest form‚ break-even analysis provides insight into whether or not revenue from a product or service has the ability to
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copies will be sold. Fixed costs are $1 million and unit variable costs are $0.50 per magazine. From the information provided here‚ what is SHAPE magazine ’s total revenue‚ obtained at the higher price? a. $3‚750‚000 b. $3‚250‚000 c. $2‚125‚000 d. $1‚625‚000 e. $675‚000 Answer: b Rationale: Total revenue = Price x Quantity. Total revenue at the higher price is equal to the price of $3.25 x the quantity of 1‚000‚000 copies‚ or $3‚250‚000. TOTAL COST DEFINITION The sum of fixed
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What is break-even analysis? Analysis to establish that the point‚ by which the income received equals the costs tied together with obtaining the income. Break-even analysis predicts what is known as the margin of safety‚ amount which the income exceeds break-even point. It is an amount that the income can fall while still staying above the break-even point. What is break-even point? The break-even point is‚ a point‚ by which increases equal losses in general. The break-even point determines when
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article: Break-even (economics) In economics & business‚ specifically cost accounting‚ the break-even point (BEP) is the point at which cost or expenses and revenue are equal: there is no net loss or gain‚ and one has "broken even." A profit or a loss has not been made‚ although opportunity costs have been "paid‚" and capital has received the risk-adjusted‚ expected return.[1] It is shown graphically as the point where the total revenue and total cost curves meet. In the linear case the break-even
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