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Muscat Pharmacy had sales of RO 1,000,000 (50,000 units) for 2019. The variable expenses were RO...

  1. Muscat Pharmacy had sales of RO 1,000,000 (50,000 units) for 2019. The variable expenses were RO 600,000 and fixed expenses were RO 300,000. What is the break-even point in units?

Select one:

a. 400,000

b. 37,500

c. None of the answers are correct

d. 750,000

e. 75,000

  1. Muscat Pharmacy had sales of RO 1,000,000 (50,000 units) for 2019. The variable expenses were RO 600,000 and fixed expenses were RO 300,000. What is the contribution margin ratio?

Select one:

a. 50%

b. 400,000

c. 30%

d. 40%

e. None of the answers are correct

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Homework Answers

Answer #1

1.

Break even point in units = Fixed expense /(selling price per unit - variable expense per unit)

Fixed expense = 300,000

Selling price per unit = 1,000,000/50,000

= RO 20

Variable expense per unit = 600,000/50,000

   = RO 12

Break even point in units = 300,000/(20-12) = 300,000/8

= 37,500

2.

Contribution margin ratio is the percentage of Sales after subtracting variable expense

Contribution margin = Sales - Variable expense

Contribution margin ratio = Contribution margin / Sales *100

= (1,000,000 - 600,000)/1,000,000 *100

=400,000/1,000,000 * 100

= 40%

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