COST ACCOUNTING
BREAK EVEN POINT
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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£112 000
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£112 500
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£375
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£800
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Detailed explanation-1: -Take your total cost of production and subtract your variable costs multiplied by the number of units you produced. This will give you your total fixed cost.
Detailed explanation-2: -Variable costs change based on the amount of output produced. Variable costs may include labor, commissions, and raw materials. Fixed costs remain the same regardless of production output. Fixed costs may include lease and rental payments, insurance, and interest payments.
Detailed explanation-3: -Graphically, the total fixed cost looks like a straight horizontal line while the total variable cost line slopes upward. The graphs for the fixed cost per unit and variable cost per unit look exactly opposite the total fixed costs and total variable costs graphs.