A company has the following costs:

Employee salaries.17,000

Rent.11,000

Insurance.2,000

Depreciation on equipment.6,000

Variable costs: Labour24,000

: Materials16,000

: Direct Expenses2,000

: Overheads2,000

Additional information:

i)The selling price per unit is Shs. 10. The above variable costs relate to activity level of Shs. 60,000 sales.

ii)All other costs except those indicated as variable are fixed.

REQUIRED:

a)Calculate the break-even point in units and sales.(4 marks)

b)P/V Ratio(2marks)

c)Number of units required to earn a profit ksh 20,000(4 marks)

d)Explain the main assumptions of break even point

Answer rating: 100% (QA)

To calculate the breakeven point PV ratio and the number of units required to earn a profit we need to analyze the given costs and information Lets solve each part step by step a Breakeven point in un... View the full answer