Part III- How do managers find the breakeven point? (LO2) 1 1·The breakeven poin

Question

Part III- How do managers find the breakeven point? (LO2) 1 1·The breakeven point is the level of at which operating income is $ 0 In To be profitable, a other words, at that point in sales, company must sell volume to breakeven, then they will have a the volume to breakeven. If they sell less than the 12. The operating income statement approach is based on the format of the income statement. Using this approach, sales and variable expenses are expressed on a per unit basis. To find the breakeven point, we fill in all of the information we know and set operating income equal to Finally, we solve for 13. At breakeven, the company's fixed expenses equal its 14. Any additional units sold above the breakeven point will generate additional operating earned. income equal to the additional once the fixed costs are covered, the only increase in costs are variable costs. Since contribution margin is the amount of sales left after covering variable costs, and fixed costs do not increase, it represents the amount that operating income increases. This happens because 15. Write the equation you would use for the operating income approach.

Explanation / Answer

Question 11). i).  Answer :- Sales

Question 11). ii).  Answer :- Total revenue = Total cost.

Question 11). iii).  Answer :- Above

Question 11). iv).  Answer :- Loss.

Question 12). i). Answer :- Marginal costing.

Question 12). ii). Answer :- Zero.

Question 12). iii). Answer :- Break even point.

Question 13). Answer :- Contribution margin.

Question 14). Answer :- Contribution margin.

Question 15). Answer :- Operating income = Sales - Variable costs - Fixed cost.

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