analysis as a decision-making tool. The definition of the Break-even analysis: The break-even analysis is an analysis of a product or company’s sales required to neither lose money nor make a profit‚ but simply to cover costs. Explain in mathematical term: total revenues – total costs = 0. The methods: By using a break-even formula or by drawing a break-even chart. Why is it so important using a break-even analysis? Because it gives vital information about a business or a company’s financial status
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Question 1 2 out of 2 points | | | If variable costs increase‚ but price and fixed costs are held constant‚ the break even point will decrease. Answer | | | | | Selected Answer: | False | Correct Answer: | False | | | | | Question 2 2 out of 2 points | | | In general‚ an increase in price increases the break even point if all costs are held constant. Answer | | | | | Selected Answer: | False | Correct Answer: | False | | | | | Question
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suffered minor smoke damage from a fire in the warehouse. The company can sell the goods "as is" for $45‚000; alternatively‚ the goods can be cleaned and shipped to the firm’s outlet center at a cost of $23‚000. There the goods could be sold for $80‚000. What alternative is more desirable and what is the relevant cost for that alternative? A. Sell "as is‚" $125‚000. B. Clean and ship to outlet center‚ $23‚000. C. Clean and ship to outlet center‚ $103‚000. D. Clean and ship to outlet center‚ $148‚000. E
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Overhead costs 1 425 $2‚525 2 460 $2‚961 3 410 $2‚484 4 480 $2‚649 5 502 $2‚705 6 418 $2‚496 variable cost component (b) = Change in total cost / Change in activity level Here‚ highest activity level is on month 5 = 502 machine hours; lowest level of activity is on month 3 = 410 machine hours b= (2705 – 2484) / (502 – 410) = 2.40 Activity level High Low Total Cost $2‚705 $2‚484 Less: Variable costs 502 × 2.40 1205 410 × 2.40 984 Total Fixed costs 1500 1500 So‚ the fixed overhead cost
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faced with the challenge of whether the subsidiary‚ SDS can be a profitable business. As Peter Flores‚ president of STC is preparing to meet with Cynthia Wu‚ manager of SDS‚ our group will review some common cost behaviors associated with distinguishing different types of costs; whether fixed or variable relevant to activity‚ construct a contribution margin income statement‚ review net income relative to reduction and increases to commercial price‚ and finally based on our financial analysis of SDS
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Q1. A company has the following costs and revenues relating to a product Selling price £114.00 Less Labour @ £8.50 per hour £42.50 Raw materials @ £2.80 per kg. £25.20 Variable overheads £ 8.80 Fixed cost per unit £ 7.50 = Profit per unit £30.00 What is the contribution margin? Contribution margin = Selling price - Variable Costs = Selling price - (Labour + Raw materials + Variable overheads) = £114 - (£42.50 + £25.20 + £8.80) = £37.50 Q2. A winemaker
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STYLING American InterContinental University [Type the author name] 8/7/2012 Abstract Andre has asked me to look over his existing way of doing business. His questions revolve around contribution margin‚ fixed costs‚ and variable costs. His questions are answered in detail. An Excel spreadsheet is included. Andre has a thriving barber shop business with five full time barbers working for him. He asked me to look at his business and determine if paying the barbers
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data used for this analysis - specifically the overhead cost data‚ seems to be based on incorrect cost allocation method and might have led to wrong classification of the products. b. What are the potential benefits of outsourcing products which have no hope of becoming world-class in terms of competitive position and potential? Answer: Potential benefits of outsourcing products are include: * Lower operational and labor costs * Allows focusing on core business processes while delegating
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160 Average variable cost per passenger $ 70 Fixed operating cost per month $3‚150‚000 Formula : Revenue = Units Sold * Unit price Contribution Margin = Revenue – All Variable Cost Contribution Margin Ratio = Contribution Margin/Selling Price Break Even Points in Units = (Total Fixed Costs + Target Profit )/Contribution Margin Break Even Points in Sales = (Total Fixed Costs + Target Profit )/Contribution
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the red. In order to do this‚ we need to explain variable and fixed costs‚ period and product costs‚ and rewrite Grear Rafting’s income statement. Grear Rafting’s income statements is provided below. Grear Rafting Company Income Statement For the Year Ended December 31‚ 2008 Revenue $1‚048‚000 Rental Cost of Rafts and Camping Equipment (208‚600)
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