Q. What is Cost Sheet? What are its Uses/ Importance’s/ advantages, What is Break-Even Point and discuss the importance of Break-Even analysis (June'14).
Q. What is Cost Sheet? What are its Uses/ Importance’s/ advantages (June'14)?
Cost Sheet: Cost sheet is a statement, which shows various components of total cost of a product. It classifies and analyses the components of cost of a product. Previous period's data is given in the cost sheet for comparative study. It is a statement which shows per unit cost in addition to Total Cost. Selling price is ascertained with the help of cost sheet. The details of total cost presented in the form of a statement are termed as Cost sheet.
Uses/Importance/Advantages of Cost Sheet
- It discloses the total cost and the cost per unit.
- It enables a manufacturer to keep a close watch and control over the cost of production.
- It provides a comparative study of various elements of current cost with past results and standard cost.
- It acts as a guide to the manufacturer and helps him in formulating production policies.
- It helps in fixing up the sales price more accurately
- It helps in minimizing the cost of production.
- It helps in submission of accurate quotations of tenders for supply of goods.
Q. What is Break-Even Point and discuss the importance of Break-Even analysis (June'14).
The break-even point (BEP) is the point at which cost or expenses and revenue are equal. Break-even point is a point at which total costs just equal or break even with sales. This is the activity point at which neither profit is made nor loss is incurred. Break-even point of an enterprise/firm is a point where total revenue/sale proceeds/sale or output equals total cost.
Usefulness/Importance of Break-Even analysis:
1. Fair knowledge about break even analysis can help bankers/banking to examine loan proposal of a firm.
2. Break even analysis helps the bankers in assessing working capital requirement of a unit.
3. This analysis helps in revealing clear projections of profit planning of an enterprise at different production level vis-à-vis the financial needs.
4. It also helps to find rate of return on investment of capital at varying levels of production.
5. Break-even lies can be quite useful to management in determining the need for action.
Q. What is Cost Sheet? What are its Uses/ Importance’s/ advantages (June'14)?
Cost Sheet: Cost sheet is a statement, which shows various components of total cost of a product. It classifies and analyses the components of cost of a product. Previous period's data is given in the cost sheet for comparative study. It is a statement which shows per unit cost in addition to Total Cost. Selling price is ascertained with the help of cost sheet. The details of total cost presented in the form of a statement are termed as Cost sheet.
Uses/Importance/Advantages of Cost Sheet
- It discloses the total cost and the cost per unit.
- It enables a manufacturer to keep a close watch and control over the cost of production.
- It provides a comparative study of various elements of current cost with past results and standard cost.
- It acts as a guide to the manufacturer and helps him in formulating production policies.
- It helps in fixing up the sales price more accurately
- It helps in minimizing the cost of production.
- It helps in submission of accurate quotations of tenders for supply of goods.
Q. What is Break-Even Point and discuss the importance of Break-Even analysis (June'14).
The break-even point (BEP) is the point at which cost or expenses and revenue are equal. Break-even point is a point at which total costs just equal or break even with sales. This is the activity point at which neither profit is made nor loss is incurred. Break-even point of an enterprise/firm is a point where total revenue/sale proceeds/sale or output equals total cost.
Usefulness/Importance of Break-Even analysis:
1. Fair knowledge about break even analysis can help bankers/banking to examine loan proposal of a firm.
2. Break even analysis helps the bankers in assessing working capital requirement of a unit.
3. This analysis helps in revealing clear projections of profit planning of an enterprise at different production level vis-à-vis the financial needs.
4. It also helps to find rate of return on investment of capital at varying levels of production.
5. Break-even lies can be quite useful to management in determining the need for action.
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