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C/S ratio calculation

Forums › FIA Forums › MA2 Managing Costs and Finance Forums › C/S ratio calculation

  • This topic has 2 replies, 2 voices, and was last updated 1 year ago by Huzaifabutt3g.
Viewing 3 posts - 1 through 3 (of 3 total)
  • Author
    Posts
  • April 14, 2024 at 2:02 am #703878
    Huzaifabutt3g
    Participant
    • Topics: 6
    • Replies: 4
    • ☆

    A company expected to sell 20000 units of a single product in a period at Sale price is $35 per unit. The fixed cost in the period are expected to total $245000.
    What is the contribution to sale ratio is required to achieve Breakeven?

    April 14, 2024 at 3:36 pm #703893
    Ken Garrett
    Keymaster
    • Topics: 10
    • Replies: 10595
    • ☆☆☆☆☆

    To break even the company must earn a contribution of 245,000 so as to draw level with the fixed costs.

    If 20,000 units are to be sold this means 245/20 = 12.25 contribution per unit.

    SP per unit = 35
    Contribution/unit = 12.25

    So, C/S ratio = 12.25/35 = 0.35, or 35%.

    April 15, 2024 at 2:21 pm #704075
    Huzaifabutt3g
    Participant
    • Topics: 6
    • Replies: 4
    • ☆

    Thank you

  • Author
    Posts
Viewing 3 posts - 1 through 3 (of 3 total)
  • The topic ‘C/S ratio calculation’ is closed to new replies.

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