Consider the following data with respect to the one product manufactured by XYZ

Question

Consider the following data with respect to the one product manufactured by XYZ Co.: Sales price= $40 per unit Variable production costs= $12 per unit Variable non-production costs= $4 per unit Fixed production costs= $480,000 Fixed non-production costs= $240,000 60,000 units planned production (normal quantity) Required (assume absorption costing) 1. Calculate the breakeven volume in units if production= 0, i.e. Sales= ? 2. Calculate the breakeven volume in units if sales=0, i.e., Production=? BluR PUSREUSh ünder under absorption absorption costing: costings Consider the following data with respect to the one product manufactured by XYz co.: Sales Price $40 per unit Variable production costs $12 per unit variable costs - non-production $4 per unit Fixed product.ion costa $480.000 Fixed costs -non-production = $2484000 Fixed production costs = $480,000 inh, nyNtor1 0 2424000 60,000 units planned production (normal quantity) Required (assuming absorption costing) 1. Calculate a br clate a breakeven volume in units if productiono i.e., Sales? op 2. Calculate a br eakeven volume in units if sales ol i.e.· 6svextory Production ?

Explanation / Answer

Formulae of Break Even Point = (Fixed cost / Sale – Variable cost)

(1) Break Even Point (Sales) = $720000 x 40 / 24 = $1200000

(2) Break Even Point (Production) = $720000 / 24 = 30000 Units

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