P11-6 - Break Even Analysis 5 10 15 20 25 2 4 6 8 10 12 14...

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1) Estimated Income Statement: Particulars          Price per Unit (in $) Total (in $) Sales  (20000 units) 100 2000000 Less variable expenses 50 1000000 Contribution margin 50 1000000 Less fixed expenses 500000 Net operating income  500000 2) Expected Contribution Margin Ratio:     CM Ratio  = (Contribution Margin / Sales) × 100 = (1000000 / 2000000)*100 = 50% 3) Break Even Sales in Unit:     Break Even in Units=  Fixed Cost / Contribution per Unit)  = (500000 / 50)  = 10000 units
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4) Cost Volume Profit Chart:
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Unformatted text preview: Break Even Analysis 5 10 15 20 25 2 4 6 8 10 12 14 16 18 20 Sales Volume (in '000 units) Revenue & Cost (in '000 $) Fixed Cost Line Total expenses Total Cost Line Sales Line Margin of Safety in Rupees 5) Expected Margin of Safety: Margin of Safety = (expected sales - breakeven sales) = ( 2000000 – 1000000) = $ 1000000 6) Determination of Operating Leverage: Operating leverage = Contribution margin / Net operating income = 1000000 / 50000 = 20...
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This note was uploaded on 04/11/2011 for the course ACC 305 taught by Professor Allison during the Spring '11 term at Western Intl..

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P11-6 - Break Even Analysis 5 10 15 20 25 2 4 6 8 10 12 14...

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