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Essay / Research Paper Abstract
This 3 page paper presents an example of break even analysis using an example of a produce from Autozone. All calculations are shown. The bibliography cites 3 sources.
Page Count:
3 pages (~225 words per page)
File: TS14_TEbreakauto.rtf
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Unformatted sample text from the term paper:
sold and the revenues that is produced. In this case we can use the example of a new line of auto parts, we will assume that one of the latest
ranges of air fresheners for the car. Generally speaking there are two types of costs in accounting, fixed costs and variable costs. Fixed costs are those costs that
will remain the same regardless of how much is produced. For example, the cost of the building, the cost of insurance, rates and other none changing costs (Chadwick, 2003). Variable
costs are the costs that will vary directly in line with the level of production, fir example, the parts that are used in production and transportation costs. There are also
some costs that can be classified as semi variable, as they may vary, but only within set parameters, for example, labor. However in this case we will assume the shop
labor as the part of the fixed overhead that the product has allocated to it. The labor of production is included in the unit material costs as Autozone is not
a manufacturer, they are a retailer and will purchase the goods on a made basis. To consider the costing breakdown and the break even level the first stag is
to look at the overheads. This is being looked at over a period of 12 months, and the allocation of overheads may be assumed to be allocated in the level
of the promotional level of sales that the air fresheners make up for the stores. The fixed costs may look like this, the fixed costs are low as the air
fresheners only take up a small perchance of the cost driver allocation. Figure 1 Fixed Costs Shelf space/real estate cost (including utilities) 10,000 Shop labor 5,000 Head office/admin costs
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