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Under this technique all costs are classified into fixed costs and variable costs. Only variable costs are considered product costs and are allocated to products manufactured. These costs include direct materials, direct labor, direct expenses and variable overhead. Fixed costs are not considered for computing the cost of products or valuation of inventory.
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Break Even
1.
Cost-Volume-Profit Analysis
2.
3.
4.
5.
6.
Breakeven Point Sales
Variable expenses Fixed expenses – = Total revenues = Total costs
7.
Breakeven Point (Selling
price × Quantity sold) – (Variable unit cost × Quantity sold) – Fixed costs = Operating income
8.
Breakeven Point
9.
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