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Details of cost per unit at an activity level of 10,000 units in Pratibha Ltd. are as follows: 10,000 30,000 50,000 5,000 units Raw Materials 20 Direct 16 4 Direct Expenses a 12 60 64 Variable overheads Fixed Overheads Total Cost per unit Selling Price per unit Profit per unit How many units must be sold to break-even?
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Details of cost per unit at an activity level of 10,000 units in Prati...
Calculation of Break-Even Point in Pratibha Ltd.


Cost per Unit


  • Raw Materials: 20

  • Direct Labor: 16

  • Direct Expenses: 12

  • Variable Overheads: 60

  • Fixed Overheads: 64

  • Total Cost per Unit: 172



Selling Price per Unit


  • Selling Price per Unit: 215

  • Profit per Unit: 43



Calculation of Break-Even Point

Break-Even Point is the point where total cost equals total revenue. Therefore, we can calculate the break-even point as follows:


Break-Even Point = Fixed Costs / Contribution Margin


Fixed Costs = Direct Expenses + Fixed Overheads = 12 + 64 = 76


Contribution Margin = Selling Price per Unit - Total Cost per Unit = 215 - 172 = 43


Substitute the values in the formula:


Break-Even Point = 76 / 43 = 1.7674


Therefore, the company must sell 1,768 units to break-even.
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Details of cost per unit at an activity level of 10,000 units in Prati...
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Details of cost per unit at an activity level of 10,000 units in Pratibha Ltd. are as follows: 10,000 30,000 50,000 5,000 units Raw Materials 20 Direct 16 4 Direct Expenses a 12 60 64 Variable overheads Fixed Overheads Total Cost per unit Selling Price per unit Profit per unit How many units must be sold to break-even?
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