Practice Co Cost Volume XYZ Ltd has the following operational financial details.

Question

Practice Co Cost Volume XYZ Ltd has the following operational financial details. Selling price per unit Variable cost per unit Total fixed costs p.a Estimated Sale for the year $60 $30 $250,000 12,500 units Required: -Calculate the break-even point (B/E) in units -Calculate the break-even point (B/E) in sales value -What is the contribution margin per unit? -What is the contribution margin ratio? -If the estimated sales volume is achieved; the net profit that could be realised will be? Note Breakeven Point (Units) - Total Fixed Cost S/ (Selling Price -Variable Cost) per unit l) 2S0,0w / (b-3° ) 12, sun z 2s».m // 377 ,S ? ? : o. 65 2)

Explanation / Answer

Break even Point = Fixed Cost / Contribution per unit

= $250,000 / ($60 - $30)

= $250,000 / $30

= 8,334 units ~ ( 8,333.33 units)

2) Break even point in sales value

= 8,334 units x $60

= $500,040

3) Contribution margin per unit

= Sales price - Variable cost

= $60 - $30

=$30

4) Contribution Margin Ratio

= (Sales price - Variable cost ) / Sales Price

= ($60 - $30) / $60

=50)

5) Net Profit = 12,500 * ($60 - $30) - $250,000

= $125,000

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