equation to calculating the breakeven point is straightforward, px = vx + FC + profit p is the price per unit, x relates to the number of units, v is the variable costs and FC is the fixed costs. In the case of a break even calculation the profit will be set at zero. To calculate the break even point in unit sales the equation is x = FC/(p-v).
The answers are presented below in table 1, using these equations.
Table 1; Break Even Point
Revenue per item (p)
Less variable costs (v)
Contribution per unit (p-v)
Fixed costs (FC)
Break even point (units)
Break even point (sales)
Therefore, the break even point is 674 units or sales of $363,960
Brief Exercise 18-10
If the firm requires a profit of $120,051, and it is known there are fixed costs of $170,500, and variable costs are 57%. Knowing that the fixed costs are met out of the contribution margin of p-v, and that this will then provide the calculation, the level of sales needed can be calculating, by taking the FC+ required profits and calculating the total required, so that FC + required profit makes up 43% of the total. Sales required will be $675,700.
Brief Exercise 18-11
The margin of safety, in dollars, is calculated by deducting the break even point from the sales achieved. For example, sales of $1,223,000 less a break even level of $770,490 gives a safety margin of $452.510.
The margin of safety in percentage terms is calculated by taking the margin of safety in dollar terms and dividing it by the total sales and expressing it as a percentage.
$452.510/$1,223,000 = 37%
Brief Exercise 19-16
The total production costs are all of the costs which are associated with production. In variable costing these are the variable costs, plus the fixed cost which are purely allocated to production. It dos not include other coasts, such as sales and administration. The cost for the Montana company is shown in table 2.
Table 2; Total production costs
Variable manufacturing overhead
Total variable product costs
Fixed manufacturing overhead
In variable costing the costs are allocated on actual production, therefore when assessing the allocation of the fixed cost, it is the costs per unit produced, and not the units sold which are used in the calculation. Sales and admin costs are not a manufacturing cost. so are not included.
Table 3; Total manufacturing costs per unit
Variable manufacturing overheads
Variable selling and admin costs
Total variable costs
Total fixed cost per unit
Total manufacturing costs per unit
The total manufacturing costs per unit are $23.61.
Brief Exercise 21-1
The static sales budget for Maris Company
QUESTION: Incremental analysis is considered to be more economical than a comprehensive analysis, while being just as effective. Do you agree or disagree and why?
An incremental analysis is quicker and less complex than a comprehensive analysis. With an incremental analysis there is a calculation of only the additional costs and the additional revenues that are created, so the difference on the bottom line can be assessed. There are some specific advantages; when a firm assesses a potential investment or new product, it is the difference that it will make on the bottom line which may be most important (Bragg, 2012). It may be argued that where the firm is using resources which are already being accounted for (fixed overheads which are not included in incremental costing), and the costs will not increase as a result, that the incremental approach helps to give an overall picture of the change in the firm without complicating the calculations. The process of incremental costing facilitates quick decision making (Bragg, 2013).
There are also some disadvantages. It is possible that incremental costing may give a misleading impression of the actual costs as it does not include overheads (Bragg, 2013). The production of the new good, or the investment being costed, is likely to be using some of the resources in the overheads, so the costing without including these is not accurate. In the short-term this may not be problematic, but in the long-term the distortion of costs may result in inefficient decision making, with profitable goods potentially supplementing less profitable goods. In the short-term incremental costing may be useful, especially where there is a spare capacity or under use of resources, but in the ling term a more accurate method, such as activity-based costing, may be more advisable in giving an assessment of total costs to help with future decision making, especially of opportunity costs are being considered with compare of different products and decision regarding which to continue or discontinue.
Bragg, Steven M, (2012), Cost Accounting Fundamentals: Essential Concepts and Examples, Accounting Tools
Are you busy and do not have time to handle your assignment? Are you scared that your paper will not make the grade? Do you have responsibilities that may hinder you from turning in your assignment on time? Are you tired and can barely handle your assignment? Are your grades inconsistent?
Whichever your reason is, it is valid! You can get professional academic help from our service at affordable rates. We have a team of professional academic writers who can handle all your assignments.
Students barely have time to read. We got you! Have your literature essay or book review written without having the hassle of reading the book. You can get your literature paper custom-written for you by our literature specialists.
Do you struggle with finance? No need to torture yourself if finance is not your cup of tea. You can order your finance paper from our academic writing service and get 100% original work from competent finance experts.
While psychology may be an interesting subject, you may lack sufficient time to handle your assignments. Don’t despair; by using our academic writing service, you can be assured of perfect grades. Moreover, your grades will be consistent.
Engineering is quite a demanding subject. Students face a lot of pressure and barely have enough time to do what they love to do. Our academic writing service got you covered! Our engineering specialists follow the paper instructions and ensure timely delivery of the paper.
In the nursing course, you may have difficulties with literature reviews, annotated bibliographies, critical essays, and other assignments. Our nursing assignment writers will offer you professional nursing paper help at low prices.
Truth be told, sociology papers can be quite exhausting. Our academic writing service relieves you of fatigue, pressure, and stress. You can relax and have peace of mind as our academic writers handle your sociology assignment.
We take pride in having some of the best business writers in the industry. Our business writers have a lot of experience in the field. They are reliable, and you can be assured of a high-grade paper. They are able to handle business papers of any subject, length, deadline, and difficulty!
We boast of having some of the most experienced statistics experts in the industry. Our statistics experts have diverse skills, expertise, and knowledge to handle any kind of assignment. They have access to all kinds of software to get your assignment done.
Writing a law essay may prove to be an insurmountable obstacle, especially when you need to know the peculiarities of the legislative framework. Take advantage of our top-notch law specialists and get superb grades and 100% satisfaction.
We have highlighted some of the most popular subjects we handle above. Those are just a tip of the iceberg. We deal in all academic disciplines since our writers are as diverse. They have been drawn from across all disciplines, and orders are assigned to those writers believed to be the best in the field. In a nutshell, there is no task we cannot handle; all you need to do is place your order with us. As long as your instructions are clear, just trust we shall deliver irrespective of the discipline.
Our essay writers are graduates with bachelor's, masters, Ph.D., and doctorate degrees in various subjects. The minimum requirement to be an essay writer with our essay writing service is to have a college degree. All our academic writers have a minimum of two years of academic writing. We have a stringent recruitment process to ensure that we get only the most competent essay writers in the industry. We also ensure that the writers are handsomely compensated for their value. The majority of our writers are native English speakers. As such, the fluency of language and grammar is impeccable.
There is a very low likelihood that you won’t like the paper.
Not at all. All papers are written from scratch. There is no way your tutor or instructor will realize that you did not write the paper yourself. In fact, we recommend using our assignment help services for consistent results.
We check all papers for plagiarism before we submit them. We use powerful plagiarism checking software such as SafeAssign, LopesWrite, and Turnitin. We also upload the plagiarism report so that you can review it. We understand that plagiarism is academic suicide. We would not take the risk of submitting plagiarized work and jeopardize your academic journey. Furthermore, we do not sell or use prewritten papers, and each paper is written from scratch.
You determine when you get the paper by setting the deadline when placing the order. All papers are delivered within the deadline. We are well aware that we operate in a time-sensitive industry. As such, we have laid out strategies to ensure that the client receives the paper on time and they never miss the deadline. We understand that papers that are submitted late have some points deducted. We do not want you to miss any points due to late submission. We work on beating deadlines by huge margins in order to ensure that you have ample time to review the paper before you submit it.
We have a privacy and confidentiality policy that guides our work. We NEVER share any customer information with third parties. Noone will ever know that you used our assignment help services. It’s only between you and us. We are bound by our policies to protect the customer’s identity and information. All your information, such as your names, phone number, email, order information, and so on, are protected. We have robust security systems that ensure that your data is protected. Hacking our systems is close to impossible, and it has never happened.
You fill all the paper instructions in the order form. Make sure you include all the helpful materials so that our academic writers can deliver the perfect paper. It will also help to eliminate unnecessary revisions.
Proceed to pay for the paper so that it can be assigned to one of our expert academic writers. The paper subject is matched with the writer’s area of specialization.
You communicate with the writer and know about the progress of the paper. The client can ask the writer for drafts of the paper. The client can upload extra material and include additional instructions from the lecturer. Receive a paper.
The paper is sent to your email and uploaded to your personal account. You also get a plagiarism report attached to your paper.
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.Read more
Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.Read more
Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.Read more
Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.Read more
By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.Read more