Calculate the break-even level of sales, Cost Accounting

Assignment Help:

Me ole cock spaniel plc. makes 3 products, details as follows:

 

Apples (£)       Pears (£)         Cockneys (£)

 

Selling price        60               80                    40

 

Variable cost       (20)            (30)                  (20)

 

Contribution        40              50                    20

 

Sales (units)      2,000             3,000               5,000

 

Fixed overhead for the year £800,000

 

Calculate the break-even level of sales?

 

Solution:

 

Average contribution per unit

 

2,000 x £40 = 80,000

 

3,000 x £50 = 150,000

 

5,000 x £20 = 100,000

 

Total    330,000/ 10,000 units = £33 average contribution per unit

 

OR 2/10 x £40 + 3/10 x £50 + 5/10 x £20 = £33 average contribution per unit

 

£800,000 / £33 per unit = 24,242 units sold (in the mix 2:3:5)

 

 

Break-even revenue

 

Apples            2/10 x 24,242 units sold =      4,848   x £60 = 290,880

 

Pears              3/10 x 24,242 units sold =      7,273   x £80 = 581,840

 

Cockneys        5/10 x 24,242 units sold =      12,121 x £40 = 484,840

 

24,242 1,357,560

 

Alternative method would be to use the average C/S ratio

 

Apples                        0.666 x 0.2 =   0.133

 

Pears                           0.625 x 0.3 =   0.1875

 

Cockneys                    0.500 x 0.5 =   0.25

 

0.5705

 

£800,000/0.5705 = £1,402,278 (close enough to £1,357,560 above!!!)


Related Discussions:- Calculate the break-even level of sales

Bases of cost classification, Bases of Cost Classification These vario...

Bases of Cost Classification These various bases of cost classification are summarized in the diagram underneath as: Here, we will usually refer to either of these ter

Depreciation (to be computed), I just do not know which form those numbers ...

I just do not know which form those numbers should go in. I would canculate the results myself. Thanks John and Ellen Brite are married and file a joint return. They have no depend

Types of cost, i want to know the different types of costs.

i want to know the different types of costs.

Decision analysis , can you guys do a project which is due in 2 weeks

can you guys do a project which is due in 2 weeks

Compute over and under absorption of variable overhead, Compute Over and Un...

Compute Over and Under Absorption of Variable and Fixed Overhead A company has a machine cost center for that the given information is available as a) Budget i. Budget

four decisions for which abc information is useful, What are the key reaso...

What are the key reasons for product cost differences among traditional costing system and ABC systems? Explain four decisions for which ABC information is useful?

Combined cash - bank account- cash book, The following is a summary of a ca...

The following is a summary of a cash book for the year ended 31 April 2012 Payments                                              $              Receipts

Break-even chart, Break-Even Chart This is a diagrammatic presentation...

Break-Even Chart This is a diagrammatic presentation of the relationship among costs, prices, expenses and the sales volume. A break-even chart expresses revenue and expens

Methods of allocating service costs, Methods of Allocating Service Costs ...

Methods of Allocating Service Costs Direct Method The service costs are merely allocated to the production department according to the usage of the services given. St

Marginal cost, Marginal Cost Marginal cost is the change in a firm's co...

Marginal Cost Marginal cost is the change in a firm's cost of production. It is related to a unit change in its output, or the added cost of producing the next unit. The margin

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd