cvp analysis

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August 28, 2017 at 6:18 am #403844
adarsh1997
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Hi John!

Need your help for a question in the kaplan kit.

VC/ unit of making in house $14
Directly attributable FC $28,800
Delivery cost per unit $ 0.20
Buy in cost $ 15.60

What is the break even in units for this decision?

1. The are actually the workings in the book, but with no explanation provided.
2. Could you please make it clear for me?
3. The answer is 16,000 units
August 28, 2017 at 8:03 am #403872
John Moffat
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The extra cost of buying in is 15.60 + 0.20 – 14 = 1.80 per unit.

Therefore the breakeven = 28,800 / 1.80 = 16,000.
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