Cost Accounting (15th Edition)

Published by Prentice Hall
ISBN 10: 0133428702
ISBN 13: 978-0-13342-870-4

Chapter 3 - Cost-Volume-Profit Analysis - Assignment Material - Exercises - Page 95: 3-20(1)b

Answer

Current Breakeven Point in Revenues. Formula: Fixed Costs / Contribution Margin Ratio (N-1) Therefore; Fixed costs (given) = 900,000 Contribution Margin Ratio (N-1) = 40% Breakeven point in revenues = 900,000 / 0.4 = USD 2,250,000

Work Step by Step

(N-1) Contribution margin per unit / sales price per unit. (USD 0.5 - USD 0.3) / USD 0.5 = 40%
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