MANAGEMENT ACCOUNTING PROJECT

REPORT
ON
CARLSBAD HOME CARE

Group-8
Akash
Patra(4)
Nidheesh
Babu(33)
Raghavendra
Trivedi(42)
Mathew
Abraham(26)

Mansi
Rawat(25)

CARLSBAD HOME CARE

Expense record

Identify the fixed and variable costs?

What is the Breakeven Point?
What assumptions were necessary in answering questions 1 and 2?
1. Identify the fixed and variable costs?

2. What is the Breakeven Point?

Ans: In accounting, the break-even point refers to the revenues needed to
cover a company's total amount of fixed and variable expenses during a
specified period of time. The revenues could be stated in dollars (or other
currencies), in units, hours of services provided, etc.
Here,
B.E.P = Fixed cost/Contribution
Contribution = Total Sales - Total Variable cost
= $739203.36-$100812
=$638391.36
Profit Volume Ratio = Contribution/ Total Sales*100
=$638391.36/ $739203.36*100
=86.36%
B.E.P =Fixed cost/PV ratio
=638374/86.36*100
=$739201.01

NOTE: Total sales of number of visitors = Number visited*Average cost per

unit
= 6384*115.79
= $739203.36

3. What assumptions were necessary in answering questions 1 and 2?

Ans: The following assumptions were made while answering questions 1 and
2:
Salaries are assumed to be Fixed Cost as they are to be paid to the
employees every month irrespective of the level of production
Since contribution per unit is not available, we have to calculate ProfitVolume (PV) ratio in order to find Break-Even Point(BOP)
Sales figure have been calculated by multiplying Average number of
visits with average cost per visits
Office cost(telephone, postage, stationery) are assumed to be variable
cost as it is consumed as per monthly requirements

Other general cost (depreciation, insurance, legal) are assumed as

fixed cost as these have to be paid every month irrespective of
production.