SUBMITTED BY: PIYALI DASGUPTA Meaning of leverage In general ,leverage refers to accomplish certain things which are otherwise not possible i.e. lifting of heavy objects with the help of lever. This concept of leverage is valid in business also . In finance ,the term ‘leverage’ is used to describe the firm’s ability to use fixed cost assets or funds to increase the return to its owners; i.e. equity shareholders. In other words, the fixed cost funds i.e. debentures & preference share
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Task 6 P6 An organisations break-even point is the point when income is equal to expenditures resulting in neither profit or loss. The break-even point is significant to organisations as public and not-for-profit sectors usually aim to achieve this point, whereas private organisations wish to earn above this point. Coca Cola Café break-even table The Coca Cola Café’s break-even table displays the business minimum and maximum output in a 30 day period along with the financial data associated
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Cost-Volume-Profit Relationships 11-2a Contribution Margin 11-2b Contribution Margin Ratio 11-2c Unit Contribution Margin 11-3 Mathematical Approach to Cost-Volume-Profit Analysis 11-3a Break-Even Point 11-3b Target Profit 11-4 Graphic Approach to Cost-Volume-Profit Analysis 11-4a Cost-Volume-Profit (Break-Even) Chart 11-4b Profit-Volume Chart 11-4c Use of Computers in Cost-Volume-Profit Analysis 11-4d Assumptions of Cost-Volume-Profit Analysis 11-5 Special Cost-Volume-Profit Relationships
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$600,000 1. Compute the number of units to be sold to break-even. 2. Prepare a CVP graph (break-even chart) and show the break-even point on the 3. If the manage is paid a commission of $6 blouse (in addition to the salesperson’s commission), what will be the effect on company’s break-even point? 4. As an alternative to (3) above, company is thinking to pay $6 commission to manager on each blouse sold in excess of break-even point. What will be the effect of these changes on
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Case Study II: A. Break-even point in passengers and revenues per month = 35,000; $5,600,000 1) Per Passenger Sales $160 Variable Expenses 70 Unit Contribution Margin $90 Fixed expenses ÷ Unit CM = $3,150,000 ÷ 90 = 35,000 passengers in break-even point 2) Contribution Margin Ratio (CM Ratio) = Contribution Margin ÷ Selling Price = $90 ÷ $160 = .5625 Break-even point in dollars = Fixed costs ÷ CM Ratio = $3,150,000 ÷ .5625 = $5,600,000 B. Break-even point in number
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GRADED DISCUSSION – ACCT2017 Question: Break-even analysis, the construction of break-even charts, and the related cost-volume- profit analysis is an area of accounting that provides management with relevant data. Discuss management’s use of this data for purposes of profit planning, policy formulation, and decision-making. It is essential to a business’s going concern that management executes proper profit planning, policy formulation and decision making. This is achieved with the help of tools
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educate those around him. Then, he was requested permission to make a presentation of some break-even data. The Duo-Products Corporation had not been making use of this type of analysis in its planning or review procedures. What French had done was to determine the level at which the company must operate in order to break even. He uses information given in past accounting records to construct his break even analysis without take into consideration with other department about the company operation
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Marginal Costing Dr. Shubhra Product Costing There are mainly two techniques of product costing and income determinationAbsorption Costing: This is a total cost technique under which total cost (i.e., fixed cost as well as variable cost) is charged as production cost. In other words, in absorption costing, all manufacturing costs are absorbed in the cost of the products produced. Marginal Costing: An alternative to absorption costing is marginal costing, also known as ‘variable costing’
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Case 16-3: Bill French Note: This case is unchanged from the Eleventh Edition. Approach This case requires quite a few calculations, but it is a good case for introducing students to the uses and limitations of break-even analysis. It can be used to discuss many of the hidden assumptions involved in such an approach. Some instructors also find it a good vehicle for discussing some of the human problems arising when a young, well-educated person begins working in a business. Finally, at The University
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$5000 * Total Fixed Cost= $8000 B.) The break-even point in number of windows to be tinted is shown below using a spreadsheet calculation: BREAK EVEN POINT CALCULATION | IN UNITS | FIXED COSTS | | PRICE PER UNIT SOLD -VARIABLE COST PER UNIT | | | | THE NUMBERS: | $8,000.00 | | $35.00 | - $19.00 | | | | BREAK EVEN POINT: | 500 | | Therefore, 500 windows would have to be sold to make the break-even point. C.) Number of windows to be tinted to
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