[kadiye02]

Another question which i would like to post here is this :

A company has fixed cost of $1.3M . Variable cost are 55% of sales up to sales level of $1.5M , but higher volumes of production and sales, the variable cost for incremental production units falls to 52% of sales.

What is the breakeven point in sales revenue , to the nearest point $1000?
Answer: 2802,000

Way of calculation :

When sales revenue is $ 1.5M , total Contribution is 45%*1.5M=$675,000.
This leaves a further $ 625000 of fixed costs to cover. To achieve breakeven , sales in excess of $1.5M need to be $ 625000/0.48=$1.302M.

Total sales to achieve breakeven =$1.5M+1.302M=$2.802M.

[kadiye02]

Let me repeat it again. A company produces and sales single product. Budget sales are $2.4m, budget fixed costs are $360,000 and the margin of safety is $400,000. What are budgeted Variable cost?

The answer i have is $ 1.968M.

Way of calculation which i didn’t understand :

Breakeven sales = $2.4m-400,000= $2,000,000
Contribution at this level of sales $360,000. Therefore C/S ratio = $360,000/2,000,000= 18%
Variable cost = 82% of sales . At sales level of $2.4M, Variable cost= 82%*2.4M=$1.968.

So, sir i didn’t understand this compicated way, can you solve it in a meaningful way which i can understand quickly .

[kadiye02]

Sorry sir, i was so nervous by the time i was posting for this question and so you mention it’s good to post questions with their answers and i think typing error has happened during when i post the question .

[kadiye02]

Hello guys, for section C Question 31, did we required to claculate profit per unti, or we just take the contribution per unit in order to calculate the sales mix profit and sales quantity variance?

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