Question

from the following data you are required to calculate break-even point and sales value at this point
Direct Material Cost per unit 8
Direct Labour Cost per unit 5
fixed overhead 25000
varciable Overheads @ 60% on direct labur
selling price per unit 25
Trade Discount 4%
If sale are 15% and 20% above the break - even volume determine the net profit
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Answer 1

Answer:

Variable costing (also known as direct costing) treats all fixed manufacturing costs as period costs to be charged to expense in the period received. Under variable costing, companies treat only variable manufacturing costs as product costs. The logic behind this expensing of fixed manufacturing costs is that the company would incur such costs whether a plant was in production or idle. Therefore, these fixed costs do not specifically relate to the manufacture of products. The following video explains the concepts in variable costing:

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