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Doubt

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Doubt

  • This topic has 1 reply, 2 voices, and was last updated 11 years ago by John Moffat.
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  • December 12, 2014 at 2:26 pm #220360
    6shahir
    Member
    • Topics: 198
    • Replies: 293
    • ☆☆☆

    A company has a single product with a selling price of $12 per unit, which is calculated as variable cost per unit, plus 20%. At an output level of 5000 units it makes a loss of $8000
    What is company total fixed cost??

    December 12, 2014 at 3:44 pm #220380
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54832
    • ☆☆☆☆☆

    The contribution per unit is 20/120 x $12 = $2 per unit.

    For 5,000 units, the total contribution is therefore $10,000.

    If they make a loss of $8,000 then the fixed costs must be $18,000

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