Mentoring Moment: Breakeven Analysis Breakeven analysis sounds complicated, but it's not. In its simplest terms, breakeven analysis
Question:
Mentoring Moment: Breakeven Analysis Breakeven analysis sounds complicated, but it's not. In its simplest terms, breakeven analysis lets you know how many units you need to sell in order to cover your costs. It uses only three simple pieces of information - fixed costs, variable costs, and price per unit. In producing a product, a firm has both fixed costs and variable costs. Fixed costs are costs that must be paid regardless of how many units are produced and sold. Variable costs, on the other hand, fluctuate directly with sales volume. The more you produce, the higher your variable costs. Let's try this out. Using your client's crystal soap business, indicate which costs are fixed and which are variable by dragging them onto the correct side of the ledger. shipping, rent, packaging, raw materials, insurance, utilities
Cost Management Accounting and Control
ISBN: 978-0324559675
6th Edition
Authors: Don R. Hansen, Maryanne M. Mowen, Liming Guan