A company sells its product at ₹15 per unit. In a period, if it produces and sells 8,000 units, it incurs a loss of ₹5 per unit. If the volume is raised to 20,000 units, it earns a profit of ₹4 per unit. The break-even p
CS Executive · Cost and Management Accounting · PYQS · December 2014
A company sells its product at ₹15 per unit. In a period, if it produces and sells 8,000 units, it incurs a loss of ₹5 per unit. If the volume is raised to 20,000 units, it earns a profit of ₹4 per unit. The break-even point of the company in rupee terms will be —
Answer & Explanation:
Correct Answer: Option (C)
Correct answer: (C) ₹1,80,000. Contribution/unit = [20,000×4 − 8,000×(−5)]/12,000 = 10. Fixed cost = 1,20,000. Break-even sales = 1,20,000/(10/15) = 1,80,000.
Topics: Marginal Costing
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