Break Even Analysis

Break Even Analysis - Break Even Analysis For this unit the...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
For this unit the following assumptions are made; 1. Total Revenue varies directly with volume (The more products that are sold, the more revenue that is generated) 2. Cost can be either Fixed or Variable . Fixed Cost - Rent, Property Taxes, Salaries Variable Cost - Material Costs, Labour Cost, Sales Commissions, Electricity 3. Fixed costs are constant, do not change over time As the number of units produced increase the fixed cost per unit will decrease. Example Your fixed costs per period are $1000 Produce 1 item Fixed cost is $1000 per unit. Produce 2 items Fixed cost is $500 per unit. . . Produce 1000 items Fixed cost is $1 per unit. 4. Variable costs are constant per unit. As the number of products produced increase so does your variable cost. Example Your variable cost per unit is $1 (labour, materials, electricity, gas…) Produce 1 item variable cost is $1 Produce 2 items variable cost is $2 . . Produce 1000 items your total variable cost will be $1000
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 08/22/2009 for the course MATH 1101 taught by Professor Tonycirusolo during the Fall '05 term at Niagara College.

Page1 / 5

Break Even Analysis - Break Even Analysis For this unit the...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online