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    Question

    Calculate the Break-even point from the following information.

    Fixed overheads = Rs.60,000

    Selling Price per unit = Rs.30

    Direct material cost per unit = Rs.12

    Direct Labour cost per unit = Rs.6

    Variable overheads are absorbed as 50% of direct labour cost

    Trade discount = 10%

     

    A 5000 Correct Answer Incorrect Answer
    B 10000 Correct Answer Incorrect Answer
    C 6666 Correct Answer Incorrect Answer
    D 2500 Correct Answer Incorrect Answer
    E 20000 Correct Answer Incorrect Answer

    Solution

    Break even output = Fixed overheads/ contribution per unit Contribution per unit = Selling price – Variable cost per unit ·         Realized selling price = Selling price – trade discount = 30 - (10%*30) = 27 ·         Variable costs = direct material + direct labour + variable O/H = 12 + 6 + (50% of 6) = 21 Thus, Contribution per unit = 27-21 = 6 Break even output = 60000/6 = 10,000 units

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