Question

Consider the concepts of break-even and profit-loss analysis. Define fixed and variable costs. Now provide real-life examples as to each of the costs

Answer #1

Break-even point is the point at which number of sales earn enough profit to offset all the costs incurred.

Profit and loss analysis is a report about all the costs ,revenues and the profit or loss resulting from it.

Fixed costs are the costs that are incurred to acquire assets like equipment ,machinery ,factories etc. These costs are fixed ,meaning they do not change with the change in the number of units produced.

Variable costs vary with the number of units produced as these costs are incurred for every unit produced.

For example : acquiring a manufacturing facility, equipment etc are fixed costs. No matter if you produce 1 unit or 1,000 ,the cost is already incurred and remains the same. You hire workers and raw materials are acquired for the production ,each unit produced will require some raw material and labor. Increase in number of units produced will increase the variable costs with each unit.

BREAK-EVEN ANALYSIS
The Warren Watch Company sells watches for $28, fixed costs are
$195,000, and variable costs are $13 per watch.
What is the firm's gain or loss at sales of 8,000
watches? Enter loss (if any) as negative value. Round your answer
to the nearest cent.
$
What is the firm's gain or loss at sales of 19,000 watches?
Enter loss (if any) as negative value. Round your answer to the
nearest cent.
$
What is the break-even point...

BREAK-EVEN ANALYSIS
The Warren Watch Company sells watches for $25, fixed costs are
$105,000, and variable costs are $14 per watch.
What is the firm's gain or loss at sales of 6,000 watches?
Enter loss (if any) as negative value. Round your answer to the
nearest cent.
$
What is the firm's gain or loss at sales of 20,000 watches? Enter
loss (if any) as negative value. Round your answer to the nearest
cent.
$
What is the break-even point...

BREAK-EVEN ANALYSIS
The Warren Watch Company sells watches for $26, fixed costs are
$150,000, and variable costs are $12 per watch.
What is the firm's gain or loss at sales of 7,000 watches?
Enter loss (if any) as negative value. Round your answer to the
nearest cent.
$
What is the firm's gain or loss at sales of 17,000 watches? Enter
loss (if any) as negative value. Round your answer to the nearest
cent.
$
What is the break-even point...

Break Even Analysis
Consider the concept of break even analysis and target
income. What is your understanding of Break Even
Analysis and Target Income. Use your own words. How do these
analytical tools relate to product pricing and cost management?
Provide specific hypothetical, numerical examples of how Break-
Even Analysis can impact pricing of any company’s products.
Pricing
Why would a company seek to position themselves as low price or
high price item in the market place? How might this
affect sales...

Calculate Break Even when a given profit is required
1. Fixed Costs a. Fixed Factory Overhead = $1,000,000 b. Fixed
Selling overhead = $500,000
2. Variable Costs
a. Variable Manufacturing costs = $1000
b. Variable selling cost per unit = $500
3. Cost Per Unit = $10,000
4. Profit of $250,000 is required ii.
Calculate the CM iii.
Calculate the CM %
Calculate Break Even Point

1. How much profit or loss determines the break-even point,
EBIT?
2. Jimmy sells gadgets for $40 each. Jimmy’s fixed costs are
$2000. Jimmy’s variable costs are $ 20.

Project #1 -
Break Even Analysis A simple break even analysis asks the
question: How many books do you have to sell in order to make back
your initial investment, otherwise known as breaking even. We make
this calculation by looking at the total income, or gross sales,
and equating it to the sum of the fixed costs, variable costs and
profit from the items. Breaking even means that you go from
negative profit to positive profit and the actual...

At the break-even point of 400 units, the variable costs were
$400 and the fixed costs were $200. What will the 401st unit sold
contribute to profit before income taxes?
Select one:
a. $ 0
b. $ 0.50
c. $ 1.50
d. $ 1.00

If fixed costs are $900,000 and variable costs are 66% of sales,
what is the break-even point in sales dollars?
a.$2,647,059
b.$3,547,059
c.$594,000
d.$1,494,000

Consider a project with the following data: accounting
break-even quantity = 24,240 units; cash break-even quantity =
16,000 units; life = three years; fixed costs = $160,000; variable
costs = $60 per unit; required return = 15 percent. Ignoring the
effect of taxes, find the financial break-even quantity.

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