COST ACCOUNTING
COST VOLUME PROFIT ANALYSIS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A company makes a single product and incurs fixed costs of $30, 000 per month. Variable cost per unitis $5 and each unit sells for $15. Monthly sales demand is 7, 000 units.What is the breakeven point in terms of monthly sales units?
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2, 000 units
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3, 000 units
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4, 000 units
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6, 000 units
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Explanation:
Detailed explanation-1: -If a hospital’s sales are $500, 000, variable costs are $200, 000 and fixed costs are $240, 000, what is the contribution margin ratio? Answer: D-If a hospital’s sales are $500, 000, variable costs are $200, 000 and fixed costs are $240, 000, the contribution ratio is 60%.
Detailed explanation-2: -Fixed cost = Total cost of production-(Variable cost per unit x number of units produced)
Detailed explanation-3: -In contrast to a variable cost, the total amount of a fixed cost does not change with the activity level. However, the cost per unit does change. The higher the level of activity, the lower the fixed cost per unit.
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