COST ACCOUNTING
COST VOLUME PROFIT ANALYSIS
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Question
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Manis Company’s sales price is RM34 per unit with total fixed cost RM20, 000. The variable cost is RM20 per unit. What is break-even point in unit?
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1, 489 units
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14, 285 units
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148 units
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1, 429 units
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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: -Calculate fixed cost per unit by dividing the total fixed cost by the number of units for sale. Example: ABC Dolls has 6, 000 dolls available for customer purchase. To determine the average fixed cost, divide $85, 200 (the total fixed cost) by 6, 000 (the number of units for sale).
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