COST ACCOUNTING
COST VOLUME PROFIT ANALYSIS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The Tulip Company is planning to sell 200, 000 units of Product . The fixed costs are RM400, 000 and variable costs are 60% of selling price. In order to realize a profit of RM100, 000, the selling price per unit would have to be
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RM3.75
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RM4.17
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RM5.00
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RM6.25
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Explanation:
Detailed explanation-1: -Variable costs change based on the amount of output produced. Variable costs may include labor, commissions, and raw materials. Fixed costs remain the same regardless of production output. Fixed costs may include lease and rental payments, insurance, and interest payments.
Detailed explanation-2: -Answer: The answer is 5, 000 units.
Detailed explanation-3: -Contribution margin is $60, 000 + $45, 000 = $105, 000 = Sales × 30%.
Detailed explanation-4: -Calculation of M.O.S-M.O.S.= Actual Sales – B.E.P. Sales = 100000-60000= ₹40, 0000 OR M.O.S. = Profit = 20000 X 100 = ₹40, 000 P/V 50 Calculation of profit on the basis of M.O.S. – M.O.S.
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