Question
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:
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
Step by Step Solution
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Step: 1
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Step: 2
Step: 3
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