Using breakeven analysis when cost behavior is unknown
Article Abstract:
Techniques for conducting break-even analyses are discussed. A break-even analysis determines realistic profitability levels for products (or services), and these product profitability levels are then used to identify the sales efforts required to offset all costs associated with the product. The technique identified as superior to historical data analyses, regression analyses, probabilistic models and simulation methods is described as a method for determining break-even points relative to various cost behaviors. Equations for calculating high and low break-even points are provided. Sales levels that exceed the hugh break-even point should result in profitable products, while sale levels that fail to meet low break-even points result in unprofitable products. Classification of costs involved in these break-even analysis methods is also discussed.
Publication Name: Management Accounting (USA)
Subject: Business, general
ISSN: 0025-1690
Year: 1986
User Contributions:
Comment about this article or add new information about this topic:
Cost account directive: an effective management tool
Article Abstract:
General Dynamics Corp. uses a management control system called a Cost Account Directive (CAD) to control all jobs, budgets, and schedules. The CAD contains a task description and a manpower spreadsheet. The task description gives both a general and detailed analysis of the job to be performed. The constituent parts of the project, delivery dates, materials, and budget requirements are also included. The spreadsheet is used to spread the project's work fairly and efficiently among employees. The directive is not only a useful method of motivating and monitoring employees, it is also a good way to improve job estimation procedures.
Publication Name: Management Accounting (USA)
Subject: Business, general
ISSN: 0025-1690
Year: 1987
User Contributions:
Comment about this article or add new information about this topic:
- Abstracts: Investors want to be in the red: fine wine is under close inspection from Australian fund managers. Days of wine and roses
- Abstracts: A meta-analysis of the effects of organizational behavior modification on task performance, 1975-95. Organizational commitment: a comparison of American, Japanese, and Korean employees
- Abstracts: Socially desirable responding in organizational behavior: a reconception. Employee ingratiation: the role of management
- Abstracts: Multiparadigm perspectives on theory building. An organizational memory approach to information management. Linking cognition and behavior: a script processing interpretation of vicarious learning
- Abstracts: Charles T. Horngren: management accounting's renaissance man. George E. Smith: let ethics guide your decisions