Question

From the following data find out the break even
point and break even sales. If the selling price is
reduced to Rs. 18 per unit. What will be the new
break even point and new break even sales?
Budgeted output – 1,00,000 units
Fixed expenses – Rs. 5,00,000
Variable expenses – Rs. 10 per unit
Selling price – Rs. 20 per unit.

Answer 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