Breakeven point is a managerial accounting term that relates to the point at which the fixed costs are covered (no author, 2013). The breakeven point can be expressed as a dollar value of revenue, or it can be expressed as a number of units (in a simple one-unit firm). There is a breakeven point for services as well as for goods. For a health care institution, the breakeven point should be expressed in dollar value of revenue. The text uses the per unit method, but no health care institution only performs one kind of service. Such an approach is more appropriate for determining the pricing of an individual service, but only then when the demand for that service is known, which is often not the case in health care. The text defines the breakeven point as an understanding of the relationship between cost, volume and profit. Calculating the breakeven point is a relatively simple process on paper. The first step is to understand the company's cost structure. When the fixed costs are known, the company then knows that in order to turn a profit, it needs to have a contribution that is...
The contribution is the revenue less the variable costs.
Managerial and Financial Accounting Case Managerial Accounting - Variable Costing Managerial accounting emphasizes short-term profit analysis, income statement important. Consequently, 'll examine discuss income statements case. Managerial and Financial Accounting Financial and managerial accounting basic difference comes on the uses. While, financial accounts are prepared for use by external parties, managerial accounts are prepared for use internally. The process of preparing the accounts in both financial and managerial accounting use similar source for
Managerial Accounting -- Budgeting 1 & (1) Is this a static or flexible budget? Since many of the budget line items are based on student enrollment, this budget format is considered to be a flexible budget. The costs of providing instructors and associated benefits is fixed by the state with regard to the ratio of students to teachers, and students per classroom (which is more a function of fire codes and building
Accounting A static budget is defined as a budget that is "planned ahead of time based on the owner's best guess about future actual activity." This type of budget is therefore put together for the upcoming time period, and is often based on the data from past time periods, plus or minus different adjustments that management thinks will be necessary. In contrast, a flexible budget is one where the business management
Margin is quite simple and states that a certain value of the production volume exists for which costs are accounted for, but profit is null. This critical production volume is calculated by applying the following formulae: The Variable Cost per Unit is calculated as Total Variable Cost per Current Volume. Therefore, aggregate revenue (Quantity (Volume) x Price per Unit (P)) shall be equal to the Variable Cost per Unit x
Accounting II ABC Overall risk profile The ABC Company may face series of risks based on the current industry and economic issues. First, the company is operating in a competitive market environment making the company to face a fierce competition from other companies producing similar products. Thus, the ABC Company may likely to lose some of its customer to competitors if the price per product is too high. Moreover, the current recession may
Accounting Process and Financial Statements. A reliable internal system of accounting is an essential element of a solvent profit or nonprofit business entity. By recording virtually every business activity or endeavor, with regards to the creation of monetary inflows of sales revenue and monetary outflows of expenses resulting from operating activities; an accounting system should provide the financial information needed to evaluate the profitability or effectiveness of past and operations.
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