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Hello Mr.John,
I want to know the exact formular to find the breakeven revenue, according to my knowlegde we can calculate (fixed overhead/CS ratio) or either (Fixed Overhead/Unit conrtibution multiplied by selling price, but when i apply both calculation method in the same question i ended up with two different answers, the question is in mock paper Q 26, Kindly advise me on the correct equation i should be following. ThanksBoth ways will give the same answer.
For me to answer about Q26 you will have to say which mock paper you are referring to 🙂
Hi Sir,
I applied for the f5 exam, have some query about the exam as you have explained on the intro. that first two will be optional like multiple choice so my question is if I want to do some calculation will I get marks on it or its doesn’t matter anyway also I can do calculation anywhere on the writing paper.
I hav a break even volume question I can’t get my head around.
In a make or buy decision we have the following data.
Variable cost per unit. £14.00
Fixed costs. £28,800
Buy in cost £15.80How many units of manufacture would represent the break even volume on this decision.
Answer is 16000 units. I get how they got the answer but why I don’t understand. What goes it mean by a buy it cost.
Hello Sir.
Please find the link below to the question 26.
zairulshaikh: You will get paper to do your workings on (but no-one will look at your workings for sections A and B of the exam, so don’t waste time doing ‘pretty’ workings 🙂 )
In future please start a new thread when asking about something different – your question has nothing to do with Breakeven Analysis!!sal2222: The buy-in cost is the amount they would have to pay if they bought from elsewhere instead of making it themselves. Buying it from elsewhere would cost an additional 1.80 per unit, but would save the fixed costs of $16,000.
Tharique: I didn’t realise you meant our mock exam (because there will be mock exams in your Revision Kit as well).
The contribution per unit from R is 7 – (60% x 7) = $2.80 per unit.
Therefore the breakeven units = 8,000 / 2.80 = 2857.1429.
Multiplying this by $7 gives breakeven revenue of $20,000Alternatively the CS ratio is 40%, therefore the breakeven revenue = 8,000/40% = $20,000
Thanks Sir John, I was calculating with same numbers twice or thrise but got it wrong, but now its totally fine. 🙂
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