Essay by izzudUniversity, Master's January 2006

download word file, 13 pages 4.8

Downloaded 188 times


1. What are the costs that are involved in Tamin's business operations?

2. What is Fixed Expenses?

3. What is Variable Expenses?

4. What is Semi-variable cost?

5. What is Break-even volume?

6. Why is it important for us to identify Break-even volume?

7. What is Avoidable cost?

8. How to calculate breakeven?

9. What is opportunity cost?

10. What type of cost that involve in decision making?

11. What is CVP?

12. What is unit contribution?


Tamin has developed a new recipe for chicken and plans to open a restaurant called Delicious Chicken in Serdang City. Tamin is certain that there is demand for his fried chickens but is unsure of the volume needed to recover all his costs. Just like any other businesspeople, Tamin would need to know when the break-even will be achieved or whether if it is possible to be achieved. If the revenues generated by his business is not even enough to cover all his costs, there is no point in starting the business in the first place.

In order to expand his business operations, more capital is needed. In this case, it is stated that Tamin's father-in-law has agreed to invest in his business with the condition that Tamin is able to convince him that profits will be at least 20% of sales revenue. Knowing that his father-in-law will be a more feasible source of financing his business compared to financial institutions, Tamin would now need to know the amount of sales that will generate the minimum profits to convince his father-in-law.

Tamin is also considering in renting a smaller-sized restaurant to save yearly fixed expenses. If he does chose a smaller-sized restaurant, the break-even volume that he needs to obtain to cover all his costs might be different. The...