Tutors on net
Tutors on NetTutors on Net

Cost Volume Profit Analysis, Linear Break Even Analysis

  Cost Volume Profit Analysis for Accomplishing Target Profits

The break even analysis is also supportive for ascertaining the degree of productivity necessary to make specified target volume of profits. Presume if the industry fixes a target amount of profits for a period equal to 10 million dollars then the degree of productivity needed to be manufactured and sold to access the given target volume of profit surpasses the break even level.

The above condition is presented in the diagram above to realise target amount of profits π or ET, the level of productivity required to be manufactured and sold enhances to VT.

Linear Break Even Analysis in Algebraic Method:

Even though graphic method of break even analysis is useful method of illustrating cost-productivity revenue-productivity and profit-productivity associations break even analysis through algebraic model is of great support in decision making difficulties by an industry.

Let                   P          =          Price per unit of Article Sold

                        V         =          Volume Manufactured and Sold
                       
                        TFC     =          Total Fixed Cost

                        AVC   =          Average Variable Cost per unit of Productivity

                        π          =          Profits

Summon up that profit π is the disparity among total revenue TR and Total Cost TC. To write in symbolic terms

                        π          =          TR – TC

Total revenue TR is equal to the price P per unit of the article times the volume of productivity sold.

Thus,

                        TR       =          P.V                                          …..Equation (1)

Alternatively, total cost is the sum of total variable cost TVC and total fixed cost TFC. Total Variable Cost is the variable cost per unit multiplied by the sold produce i.e. TVC = AVC.V. Therefore,

                        TC       =          TVC + TFC

                        TC       =          AVC.V + TFC                                    …..Equation (2)

As described above, break even volume of productivity manufactured and sold happens at the level at which total revenue TR parities total cost TC.

Let VB denote the break even volume. From Equation (1) and (2) above, at the break even volume VB, we have

                                    TR       =          TC

                                    P.VB   =          TFC + AVC.VB

                P.VB – AVC.VB        =          TFC

                (P – AVC).VB          =          TFC

                                    VB      =             TFC 
                                                            P – AVC                     …..Equation (3)

The disparity among price and average variable cost that is P-AVC in Equation (3) is termed as the contribution margin per unit which measures how much each unit of productivity manufactured and sold makes contribution to cover total fixed cost and provide for profits. From Equation (3) it adopts that break even volume of productivity manufactured and sold is ascertained by Total Fixed Cost (TFC), Price of Productivity (P) and Average Variable Cost (AVC).

Online Live Tutor Linear Break Even Analysis in Algebraic Method:

         We have the best tutors in Economics in the industry. Our tutors can break down a complex Linear Break Even Analysis in Algebraic Method problem into its sub parts and explain to you in detail how each step is performed. This approach of breaking down a problem has been appreciated by majority of our students for learning Linear Break Even Analysis in Algebraic Method concepts. You will get one-to-one personalized attention through our online tutoring which will make learning fun and easy. Our tutors are highly qualified and hold advanced degrees. Please do send us a request for Linear Break Even Analysis in Algebraic Method tutoring and experience the quality yourself.

Online Cost Volume Profit Analysis for Accomplishing Target Profits Help:

         If you are stuck with an Cost Volume Profit Analysis for Accomplishing Target Profits Homework problem and need help, we have excellent tutors who can provide you with Homework Help. Our tutors who provide Cost Volume Profit Analysis for Accomplishing Target Profits help are highly qualified. Our tutors have many years of industry experience and have had years of experience providing Cost Volume Profit Analysis for Accomplishing Target Profits Homework Help. Please do send us the Cost Volume Profit Analysis for Accomplishing Target Profits problems on which you need help and we will forward then to our tutors for review.