Breakeven Analysis

The contribution required to breakeven is best given by which of the following?

• Unit selling price less unit variable cost

• Unit contribution × number of units sold

• Total fixed costs

• Total fixed costs/contribution ratio

Which two of the following show how the breakeven point in units can be calculated?

• Total fixed costs/contribution per unit

• Contribution required to break even/contribution per unit

• Contribution/sales

• Fixed costs/costs to sales ratio

A company makes a single product and incurs fixed costs of £30,000 per month. Variable cost per unit is £5 and each unit sells for £15. Monthly sales demand is 7,000 units. The breakeven point in terms of monthly sales units is

• 2,000 units

• 3,000 units

• 4,000 units

• 6,000 units

Which two of the following statements about traditional breakeven charts are correct?

• The fixed costs are depicted by a straight line parallel to the vertical axis.

• The sales revenue line passes through the origin.

• The total cost line cuts the vertical axis at the point which is equal to the period fixed costs.

• The breakeven point is the point where the sales revenue line crosses the fixed cost line.

A company manufactures a single product for which cost and selling price data are as follows:
Selling price per unit £12
Variable cost per unit £8
Fixed costs per month £96,000
Budgeted monthly sales (units) 30,000. The margin of safety, expressed as a percentage of budgeted monthly sales, is

• 20%

• 25%

• 73%

• 125%

A company has calculated its margin of safety to be 20% of budgeted sales. Budgeted sales are 5,000 units per month and budgeted contribution is £25 per unit. What are the budgeted fixed costs per month?

• £25,000

• £100,000

• £125,000

• £150,000

Doer Ltd makes a single product, the Whizzo. This product sells for £15, and makes a contribution of £5 per unit. Total fixed costs per annum are £11,125.

If Doer Ltd wishes to make an annual profit of £11,875 how many Whizzos do they need to sell?

• 1,533 units

• 2,225 units

• 2,375 units

• 4,600 units

Which of the following statements about the product are correct?

(1) The product's selling price is £10 per unit.
(2) The product's variable cost is £8 per unit.
(3) The product incurs fixed costs of £30,000 per period.
(4) The product earns a profit of £70,000 at a level of activity of 10,000 units.

• (1), (2) and (3) only

• (1) and (3) only

• (1), (3) and (4) only

• (3) and (4) only

Jackson plc expects a new venture to yield a gross profit of 50% on sales. Fixed salary costs are expected to be £23,520 per month and other expenses are expected to be 8% of sales. Requirement Calculate the sales revenue necessary to yield a monthly profit of £58,800.

• A £56,000

• B £140,000

• C £164,640

• D £196,000