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Break Even with Non-Industrail Costs

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Break Even with Non-Industrail Costs

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by John Moffat.
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  • April 27, 2021 at 11:04 am #618964
    jkalou
    • Topics: 2
    • Replies: 1
    • ☆

    Dear tutors, i would like to ask about the non industrial cost (either variable or fixed).
    How are they being calculated in order to find the BE?

    Lets say i got a production of 1000 units
    Industrial variable 1000 euros
    Non industrial variable 170 euros
    Industrial fixed 600 euros
    Non industrial fixed 900 euros
    Sales 850 units

    As i searched accross the internet could not find any diversification on non-industrial and industrial costs?
    Should the BE be calculated on sales point (850) or on production point (1000)
    Is it correct to calculate as industrial + non indu. variable costs as 170/850 + 850

    April 27, 2021 at 3:06 pm #618986
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 49600
    • ☆☆☆☆☆

    You should have watched our free lectures on CVP analysis instead 🙂

    The breakeven point is the total fixed costs (€1,500) divided by the contribution per unit.
    However you have not given enough information in the question because although we can calculate the variable cost per unit ( (1,000 + 170) / 1,000 ) we do not know the selling price in order to be able to calculate the contribution.

    Breakeven is not calculated on the current sales or on the current production.

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