Answer:
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Explanation:
The basic theory illustrated in (Figure) is that, because of the existence of fixed costs in most production processes, in the first stages of production and subsequent sale of the products, the company will realize a loss. For example, assume that in an extreme case the company has fixed costs of ?20,000, a sales price of ?400 per unit and variable costs of ?250 per unit, and it sells no units. It would realize a loss of ?20,000 (the fixed costs) since it recognized no revenue or variable costs. This loss explains why the company’s cost graph recognized costs (in this example, ?20,000) even though there were no sales. If it subsequently sells units, the loss would be reduced by ?150 (the contribution margin) for each unit sold. This relationship will be continued until we reach the break-even point, where total revenue equals total costs. Once we reach the break-even point for each unit sold the company will realize an increase in profits of ?150.
For each additional unit sold, the loss typically is lessened until it reaches the break-even point. At this stage, the company is theoretically realizing neither a profit nor a loss. After the next sale beyond the break-even point, the company will begin to make a profit, and the profit will continue to increase as more units are sold. While there are exceptions and complications that could be incorporated, these are the general guidelines for break-even analysis.
As you can imagine, the concept of the break-even point applies to every business endeavor—manufacturing, retail, and service. Because of its universal applicability, it is a critical concept to managers, business owners, and accountants. When a company first starts out, it is important for the owners to know when their sales will be sufficient
If the federal gasoline tax increases to $1 per gallon, the gasoline price rises, demand for bicycles shifts rightward.
Option B
<u>Explanation:</u>
If the price of gasoline increases, then probably there will be a decrease in the consumption of the same as a result of which the demand for the substitute product, bicycle increases.
Demand curve a graphical representation of changes in the product or service demanded along with the changes in the cost or price of the service or product. Increase in the demand for a product, is generally represented by the rightward shift in the demand curve.
Answer:
C. retailer
Explanation:
A retailer is a business entity that buys goods from manufacturers or wholesalers and sells them to the end-users. A retailer is, therefore, a middleman who helps customers acquire products from manufacturers.
There are several types of retailers classified according to their size and nature of business. Departmental stores are the largest retailers. They stock a wide range of products from electronics, jewelry, food items, furniture, clothing, to books, all under one roof. Other retailers include supermarkets, drugstores, restaurants, convenience stores, and discount stores.
Retailers make profits by buying goods at a wholesale or factory price and selling them at a higher retail price.
Answer:
This entry would be recorded by Young with a credit to <u>cash account</u> in the amount of <u>$1,020</u>.
Explanation:
The complete journal entry for June 29 should be
- Dr Notes Payable account 1000
- Dr Interest Expense account 20
- Cr Cash account 1020
The total interest due = $1,000 x 6% x 4/12 =$20
Notes payable is a liability account and it decreases, so it should be debited.
All expenses are debited.
Cash is an asset account and it decreases, so it should be credited.
