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a company produces and sells a single product. Budgeted sales are $2.4m, budgeted fixed costs are $360,000 and the margin of safety is $400,000. What are the budgeted variable costs?
answer is $1.968m
bep = 2.4m – 400k = 2m
c/s = 360k/2m = 18%
variable cost = 82%
budgeted variable cost = 2400*82%i understand how to do most of the calculation, but the final calculation of 2400*82% is what i dont understand, why isnt it (2400-360)*82%? arent we suppose to find the variable cost from the total costs?
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