John makes and sells a product which has a variable cost of £60 and sells for £80 per unit. Budgeted fixed costs are £140,000 and budgeted sales are 16000 units. Required: What is the breakeven point and margin of safety?

John makes and sells a product which has a variable cost of £60 and sells for £80 per unit. Budgeted fixed costs are £140,000 and budgeted sales are 16000 units. Required: What is the breakeven point and margin of safety?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

John makes and sells a product which has a variable cost of £60 and sells for £80 per unit. Budgeted fixed costs are £140,000 and budgeted sales are 16000 units.

Required:

What is the breakeven point and margin of safety?

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£140,000 ÷ £20 = 70,000 Units

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