The Break-even point is affected by three components: The Break-even point will behave differently to every change in these three elements. These are the three major determinants in determining the break-even point of the company. The variable cost is the cost that fluctuates with the number of products to be manufactured and the fixed cost always remains stable i.
Break-even analysis is only cost oriented. It does not take into consideration the Sales effects or what they actually should be by taking into consideration the prices of the products. It is a simple method yet due to its drawbacks it is not widely used. IT assumes fixed costs to be fixed i. Whereas in case of long-term, the costs are always variable. The assumption of the average variable cost being equal for all the products is highly unlikely.
Sometimes the variable cost may vary from product to product. It does not take into consideration the products lying unsold with the enterprise i. These goods are not sold yet and should be accounted for. We have created this team over the years with best knowledge and expertise.
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narrative essay story spm Algegra Break Even Point Homework Tutor Help dissertation les paradis sont elles trompeuses write a comparison essay. The margin of safety Percentage: It is the percentage of the margin of safety of the company in comparison to its break-even point. Margin of Safety % =(Current Output - Break Even Output)/(Current Output)× Analysis of Break-even Point: The Break-even point is affected by three components: Variable Cost, Fixed Cost, and Sales Volume. .
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