Answered: What is the formulae used to find break…

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter11: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 12CDQ

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What is the formulae used to find break - even volume?

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Break-even volume refers to the amount of revenue that is necessary to cover all the fixed and variable costs incurred by the company during a specific period of time. It is the point where the total revenue earned by the company is equal to the total expense incurred by the company. In other words, we can say that it shows the minimum number of sales that a company must do to cover their overall expenses. It is a no-profit, no-loss situation. After this point company revenue gets increased than what it incurred as an expense and if the sales revenue is less than this point then the company is incurring losses.

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