Question

Edwin purchases a machine on 8 sep 2015. with a list price of RM8400.The trade discount...

Edwin purchases a machine on 8 sep 2015. with a list price of RM8400.The trade discount given is 10% while the cash discount terms are 4/15, n/30. He then sells the machine and makes a gross profit of 25% of the selling price.The operating expenses are 4% of the selling price. Find the breakeven

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Answer #1

Calculation of Selling Price:

Purchase price of machine = RM 8400 - 10% of RM 8400

= RM 7560

Gross Profit = 25% of selling price (or) 1/4 th of selling price

= 1/3 rd of purchase price

= 1/3 rd of RM 7560

= RM 2520.

Selling Price = Purchase price + Gross Profit

= RM 7560 + RM 2520

= RM 10080.

Calculate Break even point:

Operating Expenses = 4% of Selling Price

= 4% of RM 10080

= RM 403.20

Break even point = Operating expenses / Gross profit percentage

= RM 403.20 / 25%

= RM 1612.80

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