COST ACCOUNTING
COST VOLUME PROFIT ANALYSIS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Variable expense per unit
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Number of units sold
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Total fixed expense
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Selling price per unit
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Detailed explanation-1: -The break-even point does not change when sales change. It remains the point at which revenue covers variable and fixed costs without any profit or loss.
Detailed explanation-2: -The break-even point will increase by any of the following: An increase in the amount of the company’s fixed costs/expenses. An increase in the per unit variable costs/expenses. A decrease in the company’s selling prices.
Detailed explanation-3: -In the given stated, rise in selling price will raise the contribution per unit, that is the increase in denominator value in fraction, hence, break-even units will decrease.
Detailed explanation-4: -Break-even point in units = Fixed costs ÷ Contribution margin per unit. Your break-even point in units will tell you exactly how many units you need to sell to turn a profit. If you’re able to sell more units beyond this point, you’ll be making a profit.