What is a turning point on sale?
Most companies in operation wishes to profit from business activities, whether activities include the sale of goods or services. A common formula for determining how much income is necessary to stay in business is a broken point in sale. The basic formula for this measure distributes the company's weekly fixed expenditure on the unit's benefit, resulting in the total units to cover all basic expenditures. Break-Cery on sale can also create a dollar value that the company has to earn to balance. This latter formula divides weekly fixed expenditure on the ratio of the contribution to creating a weekly dollar sale to break. Owners and executives often use this formula to assess how many units or dollars must sell their company on the market. After calculating the turning point, the owners can determine whether this sales point is possible under current economic conditions. For example, if a company has to sell 350 units of a particular product, the company must find markets on which it is possible. If it does not reach this point for breaking, it results in lost profits.
Basic points for interruption in the above sales formula distribute weekly fixed expenditure on the unit of contribution to the unit. Weekly fixed costs are the only costs included because the company must pay these costs regardless of whether the company produces goods or services. Part of the paper dedicates different costs of production of good or services from the selling price for a unit for goods or services. The result is a unit benefit. Variable costs should only occur when the company actually produces products, and therefore Ra RA on the contribution margin includes the costs in its formula.
The ratio of the margin of the contribution at the break point of the sale is another formula. This formula divides the margin of the sale price per unit. Once youIt calculates this ratio, it can then divide weekly fixed expenses for the result for the purpose of determining the dollar of the weekly sale to cover fixed costs. This formula works best for a company that has a wide sales mix, ie multiple products it produces for sale to consumers. In this scenario, it is more important to know sales dollars rather than units to determine the point in sale.