Calculate the break-even point in sales units per month

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Reference no: EM132344822

Question

A company manufactures and sells a single product which has the following cost and selling price structure.

£/Unit £/Unit

Selling price 120

Direct material 22

Direct labour 36

Variable overhead 14

Fixed overhead 12 84

Profit per unit 36

The fixed overhead absorption rate is based on the normal capacity of 2,000 units per month. Assume that the same amount is spent each month on fixed overheads. Budgeted sales for next month are 2,200 units.

You are required to calculate;

(i) The break-even point in sales units per month.

(ii) The margin of safety for next month

(iii)The budgeted profit for next month

(iv)The sales required to achieve a profit of £ 96,000 in a month.

Reference no: EM132344822

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