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 Ltd makes a single product which it sells for $10 per unit. Fixed costs are $48, 000 per month andthe product has a contribution to sales ratio of 40%.Actual sales for the month were $140, 000.What was A Ltd’s margin of safety (in units)?
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2, 000
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12, 000
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14, 000
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20, 000
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Explanation:
Detailed explanation-1: -When 50, 000 units are produced the fixed cost is $10 per unit. Therefore, when 100, 000 units are produced fixed costs will remain at $10 per unit. Selling Price per unit $30, variable cost per unit $20, and the fixed cost of $50, 000 will reach its break-even point if unit sales are increased by $20, 000.
Detailed explanation-2: -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-3: -90000 and variable cost to sales is 75%, contribution is: Rs. 67500 Rs.
There is 1 question to complete.