Question

Using the following data, calculate the breakeven point and margin of safety in units: qSelling Price...

Using the following data, calculate the

breakeven point and margin of safety in units:

qSelling Price = $50

oVariable Cost = $40

oFixed Cost = $70,000

oPlanned Budgeted Sales = 7,500 units

HOW TO DRAW THE BEP GRAPH IN DETAILS FOR THIS QUESTION ?

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Homework Answers

Answer #1

Given information

Selling price per unit = 50

Variable cost per unit = 40

Calculate contribution per unit

Contribution per unit = Sales price – Variable cost

Contribution = 50 – 40 = 10

Fixed cost = 70,000

Break even point in units = Fixed cost/Contribution per unit

Break even point in units = 70,000 / 10 = 7000 units

Budgeted sales = 7500 units

Margin of safety = Budgeted sales – Break even sales

MOS = 7500 – 7000 = 500 units

The following is the break even diagram

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