ACCOUNTING FOR BUSINESS

Table of Contents

TASK 2 Q1.........................................................................................................................................2

TASK 2 Q2.........................................................................................................................................3

TASK 2 Q3.........................................................................................................................................4

TASK 2 Q4.........................................................................................................................................5

BIBLIOGRAPHY.................................................................................................................................7
Task 2 Q1

i) Selling price 500  

  Less: Variable Cost 300  
  Contribution margin per unit 200  
       
  Contribution Margin ratio = (Contribution margin per unit / Selling price)  
       
i) Contribution Margin ratio = (200/500) = 0.4 or 40%
       
       
Break-even point in amount  
ii) (Fixed cost / Contribution margin ratio)
=
       
  Break-even point in amount
(600000/40%) = 1500000
=
       
       
iii) Break-even point in units = (Fixed cost / Contribution margin per unit)  
       
  Break-even point in units = (600000/200) = 3000

Task 2 Q2

Importance of Break-Even Point

It is an obvious fact that every organization strives to prosper and survive by being
there. It is almost impossible to predict a certain amount of sales or earnings. No
company expects to make some losses. Given this, often a person starting a new
business asks what sum of profits will my company make a profit? This problem
predicts explicitly businesses' uncertainty about the number of sales from which
profits are generated[ CITATION Mun161 \l 1033 ].

Break-even calculation is the first resort. Therefore, before making profit-oriented

decisions, a company needs to give priority to break-even research. This takes us to
why companies should pay attention to groundbreaking studies. The break-even
point may be defined as when the net Cost (expenses) and total sales (revenue) are
equivalents. Indeed, since break-even is used to evaluate fees, volumes, and
advantages, the break-even study[ CITATION Yad14 \l 1033 ].

Break-even measurement offers many available incentives to companies. There are

a host of advantages that a corporation has not enjoyed before now. The break-even
analysis provides a glimpse into the amount of revenue a business wants to survive.
This provides the organization with a projection of its rate, duration, and benefit.
Managers can measure the impact of shifts in Cost and consumer volume. This
directs the decision-making phase of an organization[ CITATION Ram132 \l 1033 ].

The break-even analysis is also useful to management because the figures provided
can be used for critical strategic decisions, such as calculating the number of
revenues expected to gain any desired profit, such as unit and income safety margin
and leverage. Utilizing the break-even analysis, businesses may calculate the
number of units produced by a product to generate the desired benefit. Similarly, to
gain minimal profit or loss, the break-even approach is a tool used to determine the
lowest amount of income.

In situations where a company's market for a service tends to decrease, the number
of jobs to be maintained would be determined to reduce production costs and
eliminate surpluses. To keep non-selling goods, companies' storage costs are
raised; thus, the calculation of break-even will encourage management not to bear
those costs. Break-even accounting lets businesses investigate the relationship
between sales prices, fixed expenses, operating costs, and value of the industry and
the effect on the margin of contribution. To make an individual profit, the organization
will then say which element to change[ CITATION Ach14 \l 1033 ].

Managers will determine how much each service contributes to the net profit and its
value to the organization. Management of data on how much product has to be
generated to cover costs is the most critical aspect of the break-equal report. It also
allows leadership to try hard to sell a performance level that meets expenses to
make a profit. In conclusion, their prices seem to be regarded by companies who pay
careful attention to break-even studies. Thus, among other considerations,
reasonable pricing, acquisition, and spending decisions are likely to be made.

Task 2 Q3

Difference Between Fixed Cost and Variable Cost

Based on variability, the costs were divided into three groups: fixed, variable, and
semi-variable. As the name suggests, fixed costs, independent of the number of
products produced, are fixed overall. The Cost of the variable depends on the
amount of output made. The semi-linear is the cost type with features of both fixed
and variable costs. Cost accounting students will also not bifurcate fixed and variable
costs. With the change in the operation stage, operating costs do not change in the
short term[ CITATION Yad14 \l 1033 ].

As regards the difference between fixed costs and variable costs in economics, the
following argument is significant:

 Fixed costs are the costs that do not differ with adjustments in the volume of
the production device. Variable Cost is the Cost that varies with changes in
the number of production units.
 The fixed Cost is time-related, i.e., over a duration, it stays constant. Unlike
the volume-related variable Cost, that is, it varies with the volume change.
 Fixed costs are definite; even though there are no units created, they will
accumulate. On the other hand, the variable expense is not substantial; it
would only exist when the company performs any production.
 Changes in operating costs per unit. Variable costs, on the other hand, remain
stable per unit.
 Leasing, tax, wage, depreciation, fines, duties, insurance, etc. are examples
of fixed costs. Packing charges, freight, resources consumed, pensions, etc.
are examples of variable costs.
 At the time of the inventory valuation, fixed costs were not included, but
variable costs were included.
Task 2 Q4

Accountants are essential by and for businesses, whether private or official since
they are people who deal with the financial specifics of specific entities and are
drawn up and compiled by all financial records. When these accounting courses are
reasonably useful, they are increasingly preferred by residents. However, the lack of
organizations also leads to considerable difficulties because, again, students tend to
execute too many acts simultaneously and, therefore, do not have time to practice.

Benefits
 The technology used to educate individual students is advanced to interact
with other pupils in their stream, despite learning in this remote mode. A great
networking system is also available to get in touch with the people they need
whenever they feel they need it, which is usually not possible in regular
courses[ CITATION Sri16 \l 1033 ].
 In these classes, flexibility is the primary concern; while they get time to study,
a student is still independent. They may not have a proper schedule and
practice until all such tasks and acts are performed.
 No mentor is offered directly to students, and they must prepare themselves
for the examinations, so these students learn to be sufficiently disciplined.
You will also be able to enhance yourself through this course if you took this
opportunity.
 In this regard, online classes are not so expensive and, again, separate costs
are not needed, which is the true happiness of students in this situation. On
the other hand, individual facilities provide pupils with cheap but unique and
advantageous classes[ CITATION Mun161 \l 1033 ].
Challenges
 Because pressure is not as expected, learners are found to flee their
educational obligations. Also, in companies, they do not have to work actively;
it can affect their focus and discipline.
 Formalities that we have to understand; online learners are often not noticed
only because they don't have to contact individuals directly, which is often
necessary for them to be more communicative.
 Well, though students are sufficiently severe, you should ignore and escape
these defects, and then you should select online accounting courses to build a
dazzling future ahead.
Bibliography
Achim, A. & Chis, A., 2014. Financial accounting quality and its defining

characteristics. SEA: Practical Application of Science, 2(3), pp. 93-98.

Adali, S. & Kizil, C., 2017. Research on the Responsibility of Accounting

Professionals to Determine and Prevent Accounting Errors and Frauds: Edirne

Sample. EMAJ: Emerging Markets Journal, 7(1), pp. 53-64.

Agriyanto, R., Rohman, A., Ratmono, D. & Ghozali, I., 2016. Accrual based

accounting implementation: an approach for modelling significant decisions. Risk

Governance & Control: Financial Markets and Institutions, 6(4), pp. 531-539.

Schaltegger, S. & Burritt, L., 2010. Sustainability accounting for companies:

Catchphrase or decision support for business leaders?. Journal of World Business,

45(5), pp. 375-384.

Srivastava, P. & Lognathan, S., 2016. Impact of accounting information for

management decision making. IJAR, 2(5), pp. 171-174.

Yadav, B., Kumar, A. & Bhatia, S., 2014. Concept of creative accounting and its

different tools. International Journal of Management and Social Sciences Research

(IJMSSR), 3(2), pp. 66-74.