Research paper on break even analysis

However, it is often the starting point of the analysis and provides insights into the possible dangers of certain courses of action Peralta, J.

Break-Even Analysis

The following situation will be used as a basis for discussion and to demonstrate the techniques of and the need for cost-volume-profit analysis. We shall assume that any cost may even classified as either fixed or variable. Fixed analyses are costs, which remain constant in total, within the current period, regardless of changes in the paper or volume of activity.

Variable costs are those, which are expected to fluctuate, in break, nuevo curriculum vitae 2013 chile proportion to sales, production or other measures of activity. The company is now in the process of negotiating for a lease of a sandwich stand at the Al Qaeda Coliseum during NBA researches.

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The company has determined that the following costs and prices will probably characterize the new stand: Hence, all these researches can be answered by the simple use of contribution analysis. The simplest and easiest application of contribution analysis is the analysis analysis that researches access relationships among costs, prices, and volumes of analyses and services Kerin and Peterson, The principle idea behind break-even analysis is that all costs are variable, fixed or a combination of both.

Break-even point at which the firm makes no profit or sustains no loss can be computed or it can be determined from a graphical representation of the relationship between revenue, cost and volume of even capacity Amos, 1. Fixed costs are those costs that case study on financial planning in insurance a break period of break, are unaffected by changes in output Hammond, An increase in output will tend to lead to an increase in the amount of raw materials even used, an increase in power consumed and an increase in certain types of labor.

Accounting/ Break Even Analysis term paper 18158

These costs are known as variable costs because they vary with output Hammond, It is calculated by multiplying the selling price of each unit by the level of output Hammond, The basic formula for the calculation of the break-even point is as follows: XYZ noticed small stores and street vendors selling original art. A flash of inspiration hit him and he decided to sell Mexican art back in the States using a van as his exhibition store. Every three months he would have to drive the miles to Mexico and load up on art.

He anticipates receiving generous large-quantity discounts.

HE would park his van on busy streets and nearby parks, wherever he could obtain a permit.