Break-even BREAK-EVEN ANALYSIS QUESTION 4 REQUIRED Use the information given bel

Question

Break-even

BREAK-EVEN ANALYSIS QUESTION 4 REQUIRED Use the information given below to answer the folowing questions independently: 41 Calculate the break-even quantity 42 Calculate the break-even value. 43 Calculate the total Marginal Income and Net Profit/Loss. Calculate the new break-even quantity if the variable costs increase by R1 per unit. 45 By how much will net 44 profit increase or decrease if the selling price increases by R2 per unit and fixed costs increase by R30 0001 INFORMATION he following reflects t Selirg price per unit the budgeted figures of Metro Enterprises for Project Kthat yields only one product Production and sales Varlable manufacturing costs per unit anable selling and administrative costs per unit R12 120 000 units R6 R3 R300 000 Total fixed costs

Explanation / Answer

Question – 1

Break even quantity = Fixed cost / ( selling price – variable cost )

= 300,000 / ( 12 – 9 )

= 300,000 / 3 = 100,000 Units

Question - 2

Break even value = 100,000 Units * 12 = $ 1200,000

Question - 3

Question - 4

If variable cost per unit increases by 1. Total variable cost per unit will be 9 + 1 = 10 per Unit.

New ( Break even quantity ) = Fixed cost / ( selling price - Variable cost )

= 300,000 / ( 12 - 10 ) = 300,000 / 2 = 150,000 Units

Question - 5

Alternative ..............(or ) Easy way to calculate.

Increase in revenue ............. 120000 * 2 = 240000

Increase in fixed cost = 30000

So, increase in Net Income = 240000 - 30000 = 210000

Sales   = 120000 * 12 1440000 (-) Variable cost   = 120000 * 9 1080000 Marginal Income 360000 (-) Fixed cost 300000 Net Income 60000

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