We do not need to plot any other points in order to draw the graph, because variable
Question:
We do not need to plot any other points in order to draw the graph, because variable costs increase at a steady rate in line with the level of production. The data produces the graph shown in Figure 19.13.
From Figure 19.14 we can see that the break-even point is 5000 units. In terms of sales value this is between £60 000 and £80 000 on the vertical axis - probably at approximately £75 000.
We can check this answer by working out a profit statement at a production and sales level of 5000 units:
£
Sales (5000 X £15) 75 000 Variable costs (5000 x £5) (25 000)
Contribution 50 000 Fixed costs (50 000)
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Related Book For
Business Accounting And Finance For Non Specialists
ISBN: 9781861528728
1st Edition
Authors: Catherine Gowthorpe
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