Managerial Accounting Scenarios and Break-Even Analysis

MANAGERIAL ACCOUNTING
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Table of Contents
Scenario A..................................................................................................................................3
Scenario B..................................................................................................................................3
Scenario C..................................................................................................................................4
Scenario D..................................................................................................................................6
References..................................................................................................................................9
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SCENARIO A
Statement presenting calculation of contribution margin
Particular Amount in $
Fixed Cost 20000
Contribution Margin 20%
Statement presenting calculation of Break-even sales
Break-even sales in $
Total Fixed Cost /Company's contribution ratio
20000/.20
100000
Analysis:
Contribution margin can be referred to as the difference between sales and variable cost
which is expressed in terms of percentage (Plank, 2018). It is necessary to have higher
contribution ratio in order to cover fixed cost and administrative overhead. Further break
event point refers to the stage at which total cash inflow is equal to total cash inflow or in
other words; it can be said as no profit no loss zone (Weygandt, Kimmel and Kieso, 2015). In
order to ascertain break- even point total variable, and fixed cost is compared with the
volume of sales at which business make no loss and no profit. Thus, in the present case, it can
be assessed that sales of $100000 are necessary in order to reach no profit any loss stage.
SCENARIO B
Particular Amount in $
Selling price per Panda bear 28
Fixed Cost per month 100000
Variable cost 12
Statement presenting calculation of contribution margin
Sales 28
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