1.
Concept Introduction:
Break-even point:
The break-even point can be defined as the point where the total sales revenue is equal to the total costs involved. The break-even point is calculated as −
Break-even point (in Units) −
Break-even point (in Dollars) −
To calculate:
Bay Area Cycle's break-even point in units and in dollars
2.
Concept Introduction:
Margin of Safety:
Margin of safety can be defined as the amount of sales revenue over and above the break-even point. The break-even point is the point of sales revenue where totals costs are equal to total revenue. All the sales above break-even point are termed as margin of safety.
The margin of safety is calculated as under −
To compute: Margin of safety and margin of safety ratio

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Chapter 12 Solutions
Accounting: What the Numbers Mean
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