- This topic has 1 reply, 2 voices, and was last updated 3 years ago by .
Viewing 2 posts - 1 through 2 (of 2 total)
Viewing 2 posts - 1 through 2 (of 2 total)
- You must be logged in to reply to this topic.
OpenTuition recommends the new interactive BPP books for March 2025 exams.
Get your discount code >>
Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Calculating Breakeven with variable cost/ratio
I stumbled upon this question
A company is budgeting to sell 200,000 units of it’s product next year at a price of $15 per unit. Fixed costs will be $1,232,000 and the variable cost/sales ratio is 44%. What is the breakeven sales revenue and what is the margin of safety in the budge.
I know that to calculate BE Revenue I have to divide C/S ratio into Fixed Costs. But I don’t understand what variable cost/sales ratio is. I tried to find the C/S ratio from this but I am not getting the the whole concept.
The variable cost/sales ratio is the variable costs divided by the sales.
Given that the contribution is sales less variable costs, then the CS ratio must be 100% – 44% = 56%.