COST ACCOUNTING
BREAK EVEN POINT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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If a business’s fixed costs are £7, 000 and its contribution per unit is £14, what is its break-even output?
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500 units
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98000 units
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600 units
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550 units
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450 units
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Explanation:
Detailed explanation-1: -Break-even point in units = Fixed costs ÷ Contribution margin per unit. Your break-even point in units will tell you exactly how many units you need to sell to turn a profit. If you’re able to sell more units beyond this point, you’ll be making a profit.
Detailed explanation-2: -Contribution margin per unit formula would be = (Selling price per unit – Variable cost per unit.
Detailed explanation-3: -Break-Even Sales Formula = FC / (ASP-AVC) FC is the Fixed Cost. ASP is the Average Selling Price per unit. AVC is the Average Variable Cost per unit.
There is 1 question to complete.