Accounting Fundamentals: Importance, Break-Even Analysis, Management Accounting Techniques

   

Added on  2023-06-18

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Accounting Fundamentals
Accounting Fundamentals: Importance, Break-Even Analysis, Management Accounting Techniques_1
Accounting Fundamentals: Importance, Break-Even Analysis, Management Accounting Techniques_2
INTRODUCTION
The accounting process is divided into five key steps: recording, interpreting, categorizing,
analyzing, and reporting financial data. Recording financial transactions is the first and most
basic step in the accounting process. This report is going to identify about accounting
fundamental and their importance in the company in order to become effective in the
marketplace and maintain their financial stability.
QUESTION 1
(a) Calculate the break-even point (in units and revenues) of product A for Kerrigan Ltd.
Given information
Selling price 11
Variable cost per unit 6
Fixed cost 350,000
Selling units 75000 units
Break even in units = Fixed cost / sales price – variable cost
= 350,000 / 11 – 6
= 350,000 / 5
= 70,000 Units
Break even in revenues = Fixed cost / Contribution margin ratio
= 350,000 / 375000/825000
= 350000 / 45%
= £777777.77
Contribution margin ratio = contribution / sales
Accounting Fundamentals: Importance, Break-Even Analysis, Management Accounting Techniques_3

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