Lucid images ltd manufactures premium high definition television the firm has fixed cost 4000000 per year the variable cost of each tv is 2000 and tv are sold 3000 each the company sold tv during previous year required calculate break even point in units what will be the new break even point if fixed cost increase by 10 preccent what will be tye comapny net profit for the previous year thse sale manager believes that a reduction in sale lrice to 2500 will result in order for 1200 tv what will be the break even point be if price changed.
Cost-Volume-Profit Analysis
Cost Volume Profit (CVP) analysis is a cost accounting method that analyses the effect of fluctuating cost and volume on the operating profit. Also known as break-even analysis, CVP determines the break-even point for varying volumes of sales and cost structures. This information helps the managers make economic decisions on a short-term basis. CVP analysis is based on many assumptions. Sales price, variable costs, and fixed costs per unit are assumed to be constant. The analysis also assumes that all units produced are sold and costs get impacted due to changes in activities. All costs incurred by the company like administrative, manufacturing, and selling costs are identified as either fixed or variable.
Marginal Costing
Marginal cost is defined as the change in the total cost which takes place when one additional unit of a product is manufactured. The marginal cost is influenced only by the variations which generally occur in the variable costs because the fixed costs remain the same irrespective of the output produced. The concept of marginal cost is used for product pricing when the customers want the lowest possible price for a certain number of orders. There is no accounting entry for marginal cost and it is only used by the management for taking effective decisions.
Lucid images ltd manufactures premium high definition television the firm has fixed cost 4000000 per year the variable cost of each tv is 2000 and tv are sold 3000 each the company sold tv during previous year
required
calculate break even point in units
what will be the new break even point if fixed cost increase by 10 preccent
what will be tye comapny net profit for the previous year
thse sale manager believes that a reduction in sale lrice to 2500 will result in order for 1200 tv what will be the break even point be if price changed.
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