Capacity Variance – Definition and formula

Capacity Variance is that part of volume variance which arises because of over-utilization or under-utilization of plant and equipment. The working in the factory is more or less than the standard capacity. This variance arises due to idle time caused by strikes, power failure, and non-supply of materials, breakdown of machinery, absenteeism etc. Capacity variance …

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11 Limitations of break-even analysis

Though break-even analysis has gradually become a service tool for modern financial management, there are certain objections raised against the utility of break-even analysis The following are limitations of break-even analysis Fixed costs do not always remain constant. Variable costs do not always vary proportionately. Sales revenue does not always change proportionately. The horizontal axis …

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