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a company has a Fixed costs of 1.3million. variable costs are 55% of sales upto a sales level of 1.5 million, but higher volumes of production and sales, the VC for incremental units falls to 52% of sales.
What is the breake even point?
SIRR UVE GTA HELP ME OUT I M LOST IN DS QUESTION! TRIED MANY WAYS OF SOLVING IT ALSO
For sales of 1.5M, the contribution is 45% x 1.5M = 675,000
For breakeven, total contribution must equal total fixed costs of 1.3M.
So we need extra contribution of 1.3M – 0.675M = 0.625MFor extra sales, the continuation is 48% of revenue. So we need extra revenue of 0.625M / 48% = 1.30208M
So total sales revenue of 1.5 + 1.302 = 2.802M
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