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Business Finance Healthcare Finance: An Introduction to Accounting and Financial Management

Difference between economic breakeven and accounting breakeven. Introduction: Break even analysis refers to the calculation that provides a volume of sales needed to cover the cost above which the company would earn profits and below which company will bear loss because the production would not be profitable. Break even analysis emphasis on the relationship towards profit, variable cost and fixed cost. Accounting breakeven is achieved when revenue becomes equal to accounting cost and all the accounting costs are recovered. Whereas economic breakeven is achieved when target profit is attained after covering all the accounting cost. Under accounting breakeven, managers strive to have the number of visits required for the breakeven. In accounting breakeven, manager strives to establish the profit target and identify the number of visits required to achieve such profit. Accounting breakeven reflects zero profitability because the breakeven is attained at a point where revenue generated is sufficient to cover up the accounting cost. Whereas, the economic breakeven is attained at a point where revenue generated is not only sufficient to cover up the accounting cost but also results in specified level of profit.

Difference between economic breakeven and accounting breakeven. Introduction: Break even analysis refers to the calculation that provides a volume of sales needed to cover the cost above which the company would earn profits and below which company will bear loss because the production would not be profitable. Break even analysis emphasis on the relationship towards profit, variable cost and fixed cost. Accounting breakeven is achieved when revenue becomes equal to accounting cost and all the accounting costs are recovered. Whereas economic breakeven is achieved when target profit is attained after covering all the accounting cost. Under accounting breakeven, managers strive to have the number of visits required for the breakeven. In accounting breakeven, manager strives to establish the profit target and identify the number of visits required to achieve such profit. Accounting breakeven reflects zero profitability because the breakeven is attained at a point where revenue generated is sufficient to cover up the accounting cost. Whereas, the economic breakeven is attained at a point where revenue generated is not only sufficient to cover up the accounting cost but also results in specified level of profit.

Solution Summary: The author explains the difference between economic and accounting breakeven. Accounting breakseven is achieved when revenue becomes equal to accounting cost and all the accounting costs are recovered.

Healthcare Finance: An Introduction to Accounting and Financial Management

Healthcare Finance: An Introduction to Accounting and Financial Management

6th Edition

ISBN: 9781567937411

Author: Louis C. Gapenski, Kristin L. Reiter

Publisher: Health Administration Press

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Chapter 5 Solutions

Healthcare Finance: An Introduction to Accounting and Financial Management

Ch. 5.1 - Prob. 1.1STQ Ch. 5.1 - Prob. 1.2STQ Ch. 5.1 - Prob. 1.3STQ Ch. 5.1 - Prob. 2.1STQ Ch. 5.1 - Prob. 2.2STQ Ch. 5.1 - Prob. 2.3STQ Ch. 5.1 - Prob. 2.4STQ Ch. 5 - Prob. 1.1STQ Ch. 5 - Prob. 1.2STQ Ch. 5 - Prob. 2.1STQ

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