Business Help?

Question

Could anybody please help with the following.

Identify and describe (Break Even Analysis)

Identify and describe (Marginal Costing)

Identify and describe (Absorption )

Identify and describe (NPV) Net Present Value

and maybe a few graphs.

Cheers for the reply, but is there any links that may have this info.

Answer 1

The break even point for a product is the point where total revenue received equals total costs associated with the sale of the product (TR=TC). A break even point is typically calculated in order for businesses to determine if it would be profitable to sell a proposed product, as opposed to attempting to modify an existing product instead so it can be made lucrative. Break-Even Analysis can also be used to analyze the potential profitability of an expenditure in a sales-based business.

Marginal Costing is a costing technique where only variable cost or direct cost will be charged to the cost unit produced. Marginal costing also shows the effect on profit of changes in volume/type of output by differentiating between fixed and variable costs.

The Absorption Costing method is an inventory valuation / costing model that includes all manufacturing costs:
- direct materials (those materials that become an integral part of a finished product and can be conveniently traced into it)
- direct labor (those factory labor costs that can be easily traced to individual units of product. Also called touch labor)
- both variable and fixed manufacturing overhead in the cost of a unit of product. As a result, under absorption costing, fixed overhead is a product cost until sold.

Absorption costing is also referred to as the full cost method.
Net present value (NPV) is a standard method for financial evaluation of long-term projects. Used for capital budgeting, and widely throughout economics, it measures the excess or shortfall of cash flows, in present value (PV) terms, once financing charges are met. By definition,
NPV = Present value of net cash flows.

Answer 2

If I did all of that ....willI get half the grade?

I'll do one.

Break even analysis is the point in which your total costs of production of a certain number of units (not including startup costs) equal the sales from those same units.

The break even point is important to know because all sales above that point mean that you are into the profitable region.

Sustained sales below breakeven means you should, or soon will be, out of business


OKAY I'll do one more.

Marginal costing --- Is an inventory costing or valuation method as you determine the change in total cost as you produce one more unit of product.

Marginal Costing is good when you are tring to evaluate a change in equipment or process (combining steps) seeing where the economy of scale kicks in. and when it gets prohibitive to produce any further. (Capacity of equipment, storage space, overtime)

You do the rest and send me 25% of the grade.