PM Kaplan Kit 2022 Question (Cost Volume Profit Analysis)

I do not have the Kaplan Kit (only the BPP Revision Kit), so I cannot help without seeing the question. If it is labelled as a past exam question then tell me which one, because I have all past exam questions.

Oh it is not a past exam paper. This is the question: Betis Limited is considering changing the way it is structured by asking its employed staff to become freelance. Employees are currently paid a fixed salary of $240,000 per annum, but would instead be paid $200 per working day. On a typical working day, staff can produce 40 units. Other fixed costs are $400,000 per annum. The selling price of a unit is $60 and material costs are $20 per unit. What will be the effect of the change on the breakeven point of the business and the level of operating risk? A The breakeven point reduces by 6,000 units and the operating risk goes down B The breakeven point reduces by 4,571 units and the operating risk goes down C The breakeven point reduces by 4,571 units and the operating risk goes up D The breakeven point reduces by 6,000 units and the operating risk goes up

At the moment the fixed costs are $640,000 and the only variable costs are materials and therefore the contribution per unit is $40. In future the labour cost becomes variable and therefore is $200/40 = $5 per unit. Therefore the variable cost is 20 + 5 = $25, and the contribution per unit is 60 - 25 = $35. The fixed costs reduce to only $400,000.

I understand now sir. Thank you so much

You are welcome :-)