COMPANY CAN TAKE SHORT TERM DECISION USING THE DECISION MAKING INDICATOR Break-even point
The break-even stage may be defined as that point of sales amount at which total revenue is definitely equal to total cost. It's the point of no revenue no reduction. A business has been said to break-even when its total revenue are comparable to total costs. Decision making in break-even stage
It helps to consider short term decision for firm. The break-even point determines the total amount of sales the business enterprise needs just before profit could be earned. Once analyzed tightly, the break-even analysis will also help the business to identify excessive set costs. Because the break-even stage is immediately related to the fixed costs, reducing and controlling these types of costs assists the business in achieving a lesser break-even point for more rapidly profitability. Power down point
Close point is a combination of end result and price where a organization earns sufficient revenue to cover tis total variable costs. If firm is functioning at its turn off point, it's usually operating at a loss. The concept is that if companies produce earnings greater or perhaps equal to the total varying costs, it may use the extra revenue to pay down its fixed cost. Decision making in shut down stage
Shut down involve following form of decision
If perhaps decision is always to shut down, whether or not the closure should be permanent or temporary. Close decision frequently involve taken term consideration and capital expenditure and revenue If to close straight down a factory or additional activity, both because it is producing losses or because it is too costly to run. Turn off result in shaving in gross annual operating cost for number of years in the future. Income volume proportion
It is the percentage of the contribution to the sale for a concern. it is usually in percentage. It present relationship between...