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    Accounting Vs. Financial Break-Even Points

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    A finance manager considers the accounting break-even point more important than the financial break-even point. Do you agree with the manager? Give reasons.

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    https://brainmass.com/business/financial-accounting-bookkeeping/accounting-versus-financial-break-even-points-465815

    Solution Preview

    Problem: A finance manager considers the accounting break-even point more important than the financial break-even point. Do you agree with the manager?

    Solution:

    The accounting break-even point is the point of sales at which the earnings before interest and taxes is zero. That is the amount of contribution that is equal to the fixed cost.

    The accounting break-even point is computed by:

    BEP in units of output and sale = Fixed cost/contribution per unit.

    Break-even point in terms of sales value is computed by:

    Fixed cost/contribution margin ratio
    Contribution ...

    Solution Summary

    This posting involves accounting versus financial break-even points. It discuses whether an accounting break-even point is more important than the financial break-even point. Reasons are given. The explanation is given in 373 words.

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