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From the following, select the accurate equations that relate to revenue, expenses, and profits

Accounting Sep 03, 2020
  1. From the following, select the accurate equations that relate to revenue, expenses, and profits. *Multiple answers may apply

    A. Revenues = Profit + Expenses

    B. Profit = Revenue - Expenses

    C. Expenses = Revenue - Profit

    D. Profit = Revenues + Expenses

    E. Expenses = Profit + Revenues

  2. QUESTION 1 A Company manufactures and sells one product. The product has the following cost and revenue data: 70 Selling price Per Unit (AED) Variable cost Per Unit (AED) 30 Total fixed expenses per month are as follows: Expenses types AED Advertising 232,294 Rent 100,000 Heating 100,000 The company produced and sold 10,000 units during the month and had no beginning or ending inventories a. What is the break-even value in Dirhams?

Expert Solution

  1. A. Revenues = Profit +Expenses

    B. Profit = Revenue - Expenses

    C. Expenses = Revenue - Profit

    D &E are the wrong answers

  2. Fixed costs = 432294

    Contribution margin ratio = Contribution margin / Selling price

    = 40 / 70 = 57.14%

    Break even point = Fixed costs / Contribution margin ratio

    = 432294 / 57.14% = 756,552 Dirhams

    Or 756,560 Dirhams

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