Enola, SA., manufactures a product that sells for £500. The variable costs per u

Question

Enola, SA., manufactures a product that sells for £500. The variable costs per unit are: Direct materials £100; Direct labour £80 and Variable manufacturing overhead £50. During the year, the budgeted fixed manufacturing overhead is estimated to be £500,000, and budgeted fixed selling and administrative costs are expected to be £250,000. Variable selling costs are £20 per unit. The break-even point in units is

. cannot be determined.

b. 3,300 units

c. 3,100 units

d. 3,200 units

e. 3,000 units

Enola, SA., manufactures a product that sells for £450. The variable costs per unit are: Direct materials £100; Direct labour £80 and Variable manufacturing overhead £50. During the year, the budgeted fixed manufacturing overhead is estimated to be £300,000, and budgeted fixed selling and administrative costs are expected to be £200,000. Variable selling costs are £20 per unit. The number of units that must be sold to earn £330,000 in profit before taxes is

Select one:

a. 4,100 units

b. cannot be determined

c. 4,200 units

d. 4,050 units

e. 4,150 units

Explanation / Answer

Break-even point in units = (500000+250000)/(500-100-80-50-20)= 3000 Option E is correct 2 Number of units that must be sold= (300000+200000+330000)/(450-100-80-50-20)= 4150 Option E is correct

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