- December 1, 2017 at 11:05 am
Dear sir, help me with the folowing:
Fixed cost/unit 33
Budgeted sales volume for the period is 50,000 units. Production capacity is 54,000 units for the period.
What is the breakeven volume for the period?
I calculated it =1782,000/80 = 22,275 units but answer is 20,625 units ( In answer to find total budgeted fixed cost he has taken sales volume istead of budgeted production volume)…but as per my knowledge it should be production volume to calculate budgeted fixed cost.
ThanxDecember 8, 2017 at 10:42 am
Production Capacity is not something to rely on when calculating expected Fixed Costs.
54,000 units are ones that company CAN produce. But there’s no assurance that company WILL produce that much. So, we cannot rely on this quantity for our budget calculations.
Budgeted Sales Volume is the minimum quantity that company WILL produce. So, we can use this quantity as a base to calculate budgeted fixed costs.
Hope it helps.March 30, 2018 at 9:25 pm
hi need help with this question.
A company has establish the following information for the costs and revenues at an activity level of 500units
Direct material 2500
Direct labour 5000
production overheads 1000
selling costs 1250
TOTAL COST 9750
SALES REVENUE 17500
20% of the selling costs and 50% of the production overheads are fixed over all levels of activity.
The profit at an activity levels of 1000units would be……………
please i need an explanation to solve this problemMarch 31, 2018 at 5:58 pm
DM/unit = 2,500/500 = $5
DL/unit = 5,000/500 = $10
Variable = $1,000*50% = $500 = $1/unit
Fixed = $500
Variable = $1250*80% = $1,000 = $2/unit
Fixed = $250
Selling Price/unit = $17,500/500 = $35
For 1,000 units:
DMC = $5*1,000 = $5000
DLC = $10*1,000 = $10,000
Variable POH = $1*1,000 = $1,000
Fixed POH = $500
Variable Selling Costs = $2*1,000 = $2,000
Fixed Selling Costs = $250
Total Cost = $18,750
Sales Revenue = $35*1,000 = $35,000
Profit = $16,250April 3, 2018 at 10:18 pm
thank you very much
but still how did u came about the 1 unit or you just assumes
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