- This topic has 3 replies, 3 voices, and was last updated 4 years ago by
.
- Posts
Margin of safety- why has the answer used the breakeven point at “total costs” and not at fixed costs?
Breakeven is always when total revenue is equal to total costs.
Which is the same as when total contribution is equal to the fixed costs, which is what the examiners answer has done.
Have you watched my free lectures on CVP analysis? The lectures are a complete free course for Paper PM and cover everything needed to be able to pass the exam well.
Sir i have an issue with this question partc , where they say that to breakeven they need 2000 nights which they dont have so the decision is not viable.
But when we calculated the breakeven point as 20000/20 = 1000 nights , the $20 contribution was after taking into account the theatre package of have two nights which we reflected in sales value and variable cost.
So breakeven point for the whole package should be 1000 right ? why again multiply with 2 ?
- You must be logged in to reply to this topic.