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’s breakeven point is 6, 000 units per annum. The selling price is $90 per unit and thevariable cost is $40 per unit.What are the company’s annual fixed costs?
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$120
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$240, 000
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$300, 000
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$540, 000
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Explanation:
Detailed explanation-1: -Solution(By Examveda Team) = 6000 × ( 90-40) = Rs. 300000.
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.
Detailed explanation-3: -This pricing methodology helps the company in setting up the lowest acceptable price. Break-even price is calculated by using this formula = (Total fixed cost/Production unit volume) + Variable Cost per unit.
Detailed explanation-4: -Expert-Verified Answer. Answer: Selling price per unit if breakeven point is at 6000 units would be Rs. 24.
There is 1 question to complete.