Assignment # 7 Chapter # 3 definition and Problem # 3-16

Assignment # 7 Chapter # 3 definition and Problem # 3-16 -...

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Naiya Amin ACCT 3240*01WC Assignment # 7 Chapter # 3 Definition October 28 th 2010 1. Breakeven Point (BEP): breakeven point is the quantity of output sold at which total revenues equal total costs – that is the quantity of output sold that results in $0 of operating income. Managers are interested in the breakeven point because they want to avoid operating losses. The breakeven point tells them how much output they must sell to avoid a loss. The equation to find the breakeven number of units is: Breakeven number of units = fixed costs/contribution margin per unit. 2. Contribution income statement: contribution income statement is basically a income statement that groups costs into variable costs and fixed costs to highlight contribution margin. 3. Contribution margin: the difference between total revenues and total variable costs is called contribution margin. Contribution margin indicates why operating income changes as the number of units sold changes. 4.
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This note was uploaded on 12/06/2010 for the course ACCT 3240 taught by Professor Wailoo during the Spring '09 term at Kean.

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Assignment # 7 Chapter # 3 definition and Problem # 3-16 -...

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