BREAK EVEN ANALYSIS
1. What are
the uncertainties a firm faces?
1) Dynamic
nature of consumer needs
2) Diverse
nature of competition
3) Uncontrollable
nature of most elements of cost
4) Continuous
technological developments
2. How is
cost-volume-profit relationship determined?
The most important method of determining
cost-volume-profit relationship is Break even Analysis.
3. What
is Break even Analysis?
The method of determining the cost-volume-profit
relationship is known as Break even Analysis.
3. Who are
benefitted through Break even Analysis?
Break even Analysis is useful for
business executives, but also for an entrepreneur who is on
the threshold of setting up his own
unit.
5. What is the usefulness Break even Analysis?
Break even Analysis is valuable for
project appraisal executives, business students,
accountants etc.
6. How is the knowledge of Break even
Analysis is helpful to business consultant?
The knowledge of Break even Analysis
is helpful to business consultant is useful in order to
provide right recommendations to their
clients.
7. What does break even Analysis involves?
Break even Analysis the study of
revenue and costs of a firm in relation to its volume of
sales and specifically the
determination of that volume at which the firms costs and revenue will be
equal.
8. What is breakeven point?
Breakeven point is defined as that
level of sales at which total revenue is equal to total
costs and the net income is equal to
zero.
9. Write the relationship between breakeven
point and variable cost?
Write the formula for breakeven point and
contribution per unit?
10. How
is BEP determined?
BEP's are
determined as
In terms of physical units In terms of money
12. What
is break even chart?
Break even chart is defined as 'a
graphical presentation of fixed costs, variable costs and sales revenue for
various volumes of operations. It illustrates the profits or losses incurred at
different volumes of operations, the breakeven point and margin of safety'.
13.Give the
formula for Selected operating point.
14.Define
(P/V) Ratio.
It is the ratio of contribution to sales, which is
expressed in terms of percentages. It is also called as 'Contribution
Ratio'.
15. What
are the uses of BEA?
It
predicts the effects of change in price on sales.
It
predicts the effects of change on profitability of changes in costs and
efficiency.
16. Write
down the limitations of break even Analysis?
BEP Analysis assumes costs and revenue to be
linear in function. This practice is not true. Break Even Chart is useful only
for single product companies.
17.How is
BEP determined In terms of physical units?
18.How is
BEP determined In terms of money?
19.How is
Contribution Ratio Determined?
20. How is Contribution Margin per unit Determined?
Contribution Margin=Sales-Variable costs
21.
Define Marginal Ratio.
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