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a product has the following costs:
direct material-$15
direct labour-$9
variable overheads-$16
fixed overheads are $9000 per month. budgeted sales per month are 450 units to allow the product to break even.
what is the mark up which needs to be added to marginal cost to allow the product to break even at budgeted units ? ans: 50%can you help me with this question.
Have you watched my free lectures on CVP analysis yet? The lectures are a complete free course for Paper PM and cover everything needed to be able to pass the exam well.
For breakeven the total contribution must be equal to $9,000.
Therefore the contribution per unit for breakeven must be $9,000/450 = $20 per unit.
You know the total variable costs, so you should now have no problem calculated the selling price and therefore the mark-up on marginal cost 🙂
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