Detail of cost per unit at an activity level of 10000 unit in Pratibha...
Calculation of Break-Even Point:
Break-even point is the point at which total revenue equals total cost. At this point, a company is not making any profit or loss.
Formula to calculate break-even point:
Break-even point = Fixed Costs / (Selling Price per unit - Variable Costs per unit)
Given data:
Fixed Costs = Rs 12 per unit
Variable Costs per unit = Rs 44 per unit (Rs 20 + Rs 16 + Rs 8)
Selling Price per unit = Rs 64 per unit
Calculation:
Break-even point = 12 / (64 - 44)
Break-even point = 12 / 20
Break-even point = 0.6
So, the break-even point is 0.6 or 600 units.
Explanation:
To calculate the break-even point, we need to know the fixed costs, variable costs per unit, and selling price per unit. In this case, the fixed costs are Rs 12 per unit and the variable costs per unit are Rs 44 (Rs 20 for raw materials, Rs 16 for direct wages, and Rs 8 for variable overhead expenses). The selling price per unit is Rs 64 per unit.
Using the formula mentioned above, we can calculate the break-even point, which comes out to be 0.6 or 600 units. This means that the company needs to sell at least 600 units to cover its fixed and variable costs and break even. If the company sells more than 600 units, it will start making a profit of Rs 4 per unit.
Detail of cost per unit at an activity level of 10000 unit in Pratibha...
6100