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Doubt

This topic has 1 reply, 2 voices, and was last updated 9 years ago by John Moffat.

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December 12, 2014 at 2:26 pm #220360
6shahir
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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
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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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