Break-Even Point: It is the point of sales at which entity neither earns a profit nor suffers a loss. It can also be said that the point of sales at which sales value of the entity recovers the entire cost of fixed and variable nature is called break-even point. Operating leverage: Operating leverage refers to the measurement of the degree of the variable and fixed costs used by the firm. In other words, the operating leverage refers to the reacted amount of net income of a company for the given change is sales. To Describe: The implications on break-even point and operating leverage, if a company replaces its manual labor with automated equipment.
Break-Even Point: It is the point of sales at which entity neither earns a profit nor suffers a loss. It can also be said that the point of sales at which sales value of the entity recovers the entire cost of fixed and variable nature is called break-even point. Operating leverage: Operating leverage refers to the measurement of the degree of the variable and fixed costs used by the firm. In other words, the operating leverage refers to the reacted amount of net income of a company for the given change is sales. To Describe: The implications on break-even point and operating leverage, if a company replaces its manual labor with automated equipment.
Solution Summary: The author explains that break-even point is the point at which entity neither earns profit nor suffers a loss. Operating leverage refers to the degree of the variable and fixed costs used by the firm.
It is the point of sales at which entity neither earns a profit nor suffers a loss. It can also be said that the point of sales at which sales value of the entity recovers the entire cost of fixed and variable nature is called break-even point.
Operating leverage: Operating leverage refers to the measurement of the degree of the variable and fixed costs used by the firm. In other words, the operating leverage refers to the reacted amount of net income of a company for the given change is sales.
To Describe: The implications on break-even point and operating leverage, if a company replaces its manual labor with automated equipment.
In recent years, why has labor become such a small part of product costs and how can its use in overhead allocation perpetrate errors in decision-making?
Which of the following is NOT an objective of determining product costs for manufacturing firms?
A) To determine selling prices
B) to reduce operating leverage
C) to make decisions
D) to do financial reporting
Which among the following is not a relevant cost for decision making?
a.
Cost of producing additional units in case an order is accepted
b.
Future rent payments
c.
Depreciation of machinery
d.
Costs that can be avoided as a result of managerial decisions
Chapter 6 Solutions
Managerial Accounting: Tools for Business Decision Making 7e Binder Ready Version + WileyPLUS Registration Card
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