4. The following information is related to Amy's clothing business:Total variableOutput(unit)0100200300400Fixed cost(RM)1,0001,0001,0001,0001,0001,000cost(RM)300600900Total cost(RM)1,0001,3001,6001,9002,200Salesrevenue(RM)2,5008001,6002,4003,2004,000Profit (loss)(RM)(1,000)(500)5001,0001,5001,2005001,500Based on the above information, answer the following questions:a) Describe what is break-even point.b) Prepare a graph of the break-even point. From the graph, determine the break-evenpoint in units and revenue.c) Explain when the company is making a profit and when it is suffering a loss?

Break-even point is an important concept in accounting. This is part of the cost volume profit…

Based on the above information, answer the following questions: a) Describe what is break-even point. b) Prepare a graph of the break-even point. From the graph, determine the break-even point in units and revenue. c) Explain when the company is making a profit and when it is suffering a loss?

Based on the above information, answer the following questions: a) Describe what is break-even point. b) Prepare a graph of the break-even point. From the graph, determine the break-even point in units and revenue. c) Explain when the company is making a profit and when it is suffering a loss?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

4. The following information is related to Amy's clothing business:
Total variable
Output
(unit)
0
100
200
300
400
Fixed cost
(RM)
1,000
1,000
1,000
1,000
1,000
1,000
cost
(RM)
300
600
900
Total cost
(RM)
1,000
1,300
1,600
1,900
2,200
Sales
revenue
(RM)
2,500
800
1,600
2,400
3,200
4,000
Profit (loss)
(RM)
(1,000)
(500)
500
1,000
1,500
1,200
500
1,500
Based on the above information, answer the following questions:
a) Describe what is break-even point.
b) Prepare a graph of the break-even point. From the graph, determine the break-even
point in units and revenue.
c) Explain when the company is making a profit and when it is suffering a loss?

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