Accounting: Break Even Analysis and Management Accounting Techniques

   

Added on  2023-06-18

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ACCOUNTING
Accounting: Break Even Analysis and Management Accounting Techniques_1
Table of Contents
ACCOUNTING...............................................................................................................................1
Question 1........................................................................................................................................3
a) Calculation of break even point both in units and revenue.....................................................3
b) Calculation of Profit made on sale of 75000 units..................................................................3
c) Calculation of new profit figure..............................................................................................3
d) Limitations of break even analysis.........................................................................................3
Question 2........................................................................................................................................4
Discussion of importance of management accounting................................................................4
Difference between management accounting and financial accounting.....................................5
Discussion of three techniques which aids management accountant in attaining management
accounting objectives..................................................................................................................6
REFERENCES................................................................................................................................8
Accounting: Break Even Analysis and Management Accounting Techniques_2
Question 1
a) Calculation of break even point both in units and revenue
Break even point (in units) = Total Fixed cost / Contribution margin per unit
= 350000 / 5*
= 70000 Units
*Contribution margin per unit = Sales price per unit – variable cost per unit = 11 – 6 = 5
Break even point (in revenue) = Total fixed cost / Contribution margin per unit * sales price per
unit = 350000 / 5 * 11 = 70000 * 11 = 770000.
b) Calculation of Profit made on sale of 75000 units
Sales 825000 (75000 * 11)
Less:
Variable cost 450000 (75000 * 6)
Contribution margin 375000
Less:
Fixed cost 350000
Profit 25000
c) Calculation of new profit figure
Sales 1040000 (80000 * 13)
Less:
Variable cost 560000 (80000 * 7)
Contribution 480000
Less:
Fixed cost 350000 + 10000 = 360000
Profit 120000
Accounting: Break Even Analysis and Management Accounting Techniques_3

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