Question

34. If total fixed cost is Rs.8,000
1.5 points
and break even point is 4,000 units, the
contribution margin per unit will be:
Rs.0.5
Rs.50
Rs. 20
Rs.2​

Answer 1

Given :

Total fixed cost = Rs 8000

Break-even point = 4000 units

To find :

Contribution margin per unit

Solution :

• The break-even point is the production level when the cost of production becomes equal to the revenue obtained for that product.
• Therefore, Break-even point = Fixed cost / Contribution margin

From the formula for break-even point;

Contribution margin = Rs 8000 / 4000 units

                                  = Rs 2

The contribution margin per unit is Rs 2.