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Good day
I was just doing some sample exam questions from Kaplan
I would just like to confirm.
If they give me the following as Fixed costs:
Fixed Costs – Production overheads $ 10 000
Fixed Costs – Administrative $ 15 000
Are both these fixed costs added together to give $ 25 000 to use in the break even analysis?
Also should they put selling and administrative expenses of $ 10 000 , do I treat these as a fixed cost as well for the Break even amount (fixed costs part) ?
Thank you kindlyHi,
The fixed costs of Admin should go in with all other fixed costs for the breakeven calculation.The selling and admin expenses are likely to be mostly overhead but there may be some direct costs of selling so you dont automatically include these unless the question indicates they are all fixed.
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