COST ACCOUNTING
BREAK EVEN POINT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Fixed costs / Contribution per unit
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Fixed costs / Selling price per unit
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Contribution per unit/ / Fixed costs
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Fixed costs / Variable costs per unit
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Detailed explanation-1: -How to calculate a break-even point based on units: Divide fixed costs by the revenue per unit minus the variable cost per unit.
Detailed explanation-2: -To calculate the break-even point in units use the formula: Break-Even point (units) = Fixed Costs ÷ (Sales price per unit – Variable costs per unit) or in sales dollars using the formula: Break-Even point (sales dollars) = Fixed Costs ÷ Contribution Margin. Here’s What We’ll Cover: What Is the Break-Even Point?
Detailed explanation-3: -Contribution margin per unit formula would be = (Selling price per unit – Variable cost per unit.
Detailed explanation-4: -On a breakeven diagram, breakeven is shown by the intersection where Total Revenue is equal to Total Costs. The formula for calculating the breakeven number of units is: The selling price per unit minus variable cost per unit is also known as “contribution per unit”.
Detailed explanation-5: -2) Profit Volume Ratio or P/V Ratio – It is the measurement of the rate of change of profit due to change in volume of sales. Sales • Fixed Cost (₹) where, B.E.P(₹) =B.E.P (u) x Sales( p. u. ) Calculation of M.O.S-M.O.S.= Actual Sales – B.E.P. Sales = 100000-60000= ₹40, 0000 OR M.O.S.