Difference Between Break-Even Analysis And Breakeven Analysis

Question 1: PREPARING BREAK-EVEN CHART AND CONTRIBUTION ANALYSIS

a) How do managers use CVP analysis to make decision? Describe at least 5 uses of CVP analysis.

1) CVP analysis employs the same basic assumptions as in breakeven analysis. It is the technique that manager use to planning the sales price of a product and the price of product will cover the cost of product and the profit earn.

2) BEP and MOS are useful if the company experience increasing cost or need to reduce the selling price in order to remain competitive. By using BEP and MOS the company can identify the lowest price of the product that will sell. So that the company will not gain loss for each of product sold.

3) To enter new market. Any business will start with small

For example, line rent and fixed subscription charges as well as variable cost charged per minute cost. Fix cost mean the cost remain constant in every activity of production and the graph will be straight line while variable cost is increasing as the activity of production increasing. Fix cost in total will remain constant and fix cost per unit will decreasing if the activity of production increase. For variable cost in total, it will increase if the activity of production increasing and variable cost per units will remain constant and the graph will be straight

Discuss at least FIVE (5) benefits of JIT system.

The benefit of using JIT system are:-

1) Lower Warehouse Costs

Is it because storing excess inventory will cost a lot of money and if the number of goods that storing in inventory can be reduced, the cost of inventory also will reduces. The company that using JIT system may able to reduce the number of warehouse they needed and eliminate the warehouse that not necessary.

2) Better management decision

The JIT system also help company managing their stock more efficiently and they handle their supply chains and use their parts to assemble products for their customers. So that, by reducing cost in warehouse managing, the company will experienced lower cost production for their product and can provide low price to their customer. That will advantages the company to compete with their competitor.

3) Less Waste

The traditional method inventory management system will cause the company end up with pallet of unsold goods that simply go waste. The company need to reduces the prices of unsold item drastically to make sure the item sold for avoid waste and it will make the company burden with losses. By using JIT system, the company can reduces this waste and helps the company respond more quickly to what its customers