What is the break-even output if the amount charged to customers is textsterling60, the cost of making each item is textsterling25 and fixed costs are textsterling700, 000?

BREAK EVEN POINT

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

What is the break-even output if the amount charged to customers is £60, the cost of making each item is £25 and fixed costs are £700, 000?

A	£20, 000
B	£2, 000
C	20, 000
D	2, 000

Explanation:

Detailed explanation-1: -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.

Detailed explanation-2: -To calculate your break-even (dollar value) before net profit: Break-even ($) = overhead expenses ÷ (1 − (COGS ÷ total sales))

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ECONOMICS

COST ACCOUNTING

BREAK EVEN POINT