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a company has a single product with the selling price of $12per uint, which is calculated as variable cost per unit plus 20% . at an output level of 5000 units it make a loss of $8000.
what is the companys total fixed cost ?sir , iam not throwing some questions to you but i donno completely how to do the solution for this question . please help me sir .
Thank you !!!!The contribution per unit is 20/120 x $12 = $2.
So the total contribution for 5000 units is $10000.
The profit or loss is contribution – fixed costs,
so if 10000 – fixed costs = (8000), then fixed costs must be $18,000
sir,
how you calculated contribution ?
i didnt understood the way you did the full questionon :(, any other method of explanation ?
Thank youIf the variable cost was 100, then the contribution is 20 and the selling price is 120.
So for every 120 selling price, the contribution must be 20.
So for selling price of $12, the contribution is 20/120 x $12 = $2
If the contribution is +10,000, and the profit is – 8000 (i.e. a loss) then the fixed overheads must be 18,000!!!!!
Profit = contribution – fixed overheads!
sir,
actually what means contribution ?
i thought it was lyk contibution = selling price – variable cost ??
actually selling price means fixed cost ryt ?Contribution does equal selling price less variable cost.
What on earth makes you think that the selling price means fixed cost????
Profit = contribution less fixed costs
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