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Break even point formula in managerial acct11/18/2023 It is that level of activity or operation whereby the total revenue is equal to total cost (ie TRTC). Round all final answers to whole dollars. Breakeven point analysis is a mathematical model. The break-even point formula is an important tool in managerial accounting, as it provides a way to determine the minimum amount of sales. The break-even point formula is to divide the total amount of fixed costs by the contribution margin per car: Its always a good idea to check your calculations. is the number of cars it needs to service in order to cover both the companys fixed and variable expenses. If the fixed manufacturing costs were $35,802 and the fixed selling and administrative expenses were $13,000, prepare an income statement according to the variable costing concept. The break-even point formula assumes that profit is zero, and fixed costs are reflected in the equation as a total, while revenues and variable costs are reflected in the equation on a per-unit basis. The break-even point in units for Oil Change Co. The costs and selling price are as just given. Comment on why the break-even points are different. Compute the break-even point in both sales dollars and units under each of the following independent assumptions. Selling and administrative expenses: -$26,540 The variable cost is 3 per package, and fixed costs are 60,000 per month. On April 30, the end of the first month of operations, Joplin Company prepared the following income statement, based on the absorption costing concept:Ĭost of goods manufactured (5,100 units) $132,000
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