A company has fixed costs of $1.3 million. Variable costs are 55% of sales up to a sales level of $1.5 million, but at higher volumes of production and sales, the variable cost for incremental production units falls to 52% of sales. What is the breakeven point in sales revenue, to the nearest $1,000?

A company makes and sells a single product. When sales per month are $6.8 million, total costs are $6.56 million. When sales per month are $5.2 million, total costs are $5.44 million. There is a step cost increase of $400,000 in fixed costs when sales are $6.0 million, but variable unit costs are constant at all levels of output and sales.

What is the breakeven point for sales revenue per month?  

What is the breakeven point in sales, to the nearest $1,000?

Mabel Co manufactures and sells tables and chairs in a standard mix of one table to four chairs. The following information is available:

Product Table Chair

Variable cost per unit ($) 120 16

Contribution to sales ratio 0.4 0.6

Annual fixed costs are $100,000.

What is the breakeven point in sales revenue (to the nearest hundred dollars)

A company makes a single product which it sells for $2 per unit.

Fixed costs are $13,000 per month.

The contribution/sales ratio is 40%.

Sales revenue is $62,500.

What is the margin of safety (in units)?

Hare Events is also considering including a 10 km race during the running festival. It expects the race will have an entry fee of $20 per competitor and variable costs of $8 per competitor. Fixed costs associated with this race will be $48,000.

If the selling price per competitor, the variable cost per competitor and the total fixed costs for this 10 km race all increase by 10%, which of the following statements will be true?

A business manufactures a single product which it sells for $50. The variable costs of production are $10 a unit. Next month fixed costs will be $800,000. The Finance Director wants to realize a profit of $120,000. How many units must be sold to generate this profit?

Which of the following is the correct formula to calculate the break-even sales volume (in units) for a business?

A company makes a single product which it sells for $30 per unit.

Fixed costs are $18,000 per month. The contribution/sales ratio is 40%.

Next month the company’s profit target is $36,000.

What sales volume is required to achieve next month’s profit target?

ZT Ltd produces and sells three products, A,B and C in the ratio 1:2:1.

Sales price and variable cost data for the products is as follows:

A B C

Selling price ($) 8 8 10

Variable cost ($) 5 4.50 6

ZT Ltd has fixed costs of $70,000

What is ZT’s break-even sales revenue?

A profit-volume chart can illustrate the relationship between -

A company makes a single product which it sells for $2 per unit.

Fixed costs are $13,000 per month.

The contribution/sales ratio is 40%. Sales revenue is $62,500.

What is the margin of safety in units?

The following statements have been made about Cost-Volume-Profit analysis:

(1) CVP analysis allows for fluctuating selling prices.

(2) CVP analysis assumes productivity remains unchanged.

(3) CVP analysis assumes that the only factor affecting cost is volume.

Which of the above statements is/are true?

A company produces and sells a single product. Budgeted sales are $2.4 million, budgeted fixed costs are $360,000 and the margin of safety is $400,000. What are budgeted variable costs?

A company makes and sells product X and product Y. Twice as many units of product Y are made and sold as that of product X. Each unit of product X makes a contribution of $10 and each unit of product Y makes a contribution of $4. Fixed costs are $90,000.

What is the total number of units which must be made and sold to make a profit of $45,000?

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 company manufactures and sells a single product with a variable cost per unit of $36. It has a contribution to sales ratio (C/S ratio) of 25%.

The company has weekly fixed costs of $18,000.

Which of the following is the weekly breakeven point in units?

The management accountant of Caroline plc has calculated the firm’s breakeven point from the following data:

Selling price per unit $20

Variable costs per unit $8

Fixed overheads for next year $79,104

It is now expected that the product’s selling price and variable cost will increase by 8% and 5.2% respectively.

By how much will Caroline’s breakeven point for next year change by as a result of these changes?

A company produces and sells a single product. Budgeted sales are $2.4 million, budgeted fixed costs are $360,000 and the margin of safety is $400,000. What are budgeted variable costs?