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At the breakeven point of 2,000 units, variable costs total $4,000 and fixed costs total $8,000. The 2,001st unit sold will contribute to profits. Formulas
At the breakeven point of 2,000 units, variable costs total $4,000 and fixed costs total $8,000. The 2,001st unit sold will contribute to profits. Formulas 1. Cost per equivalent unit = Costs for the Period / Equivalent Units of Production for the period 2. Conversion costs = Direct Labor + Manufacturing Overhead 3. Units completed/transferred out + Equivalent units of ending work in process = Equivalent units of production 4. Predetermined Overhead rate = Estimated Overheads / Estimated Allocation Base (Activity Level) 5. Applied Overhead = Predetermined Overhead Rate x Actual Allocation Base (Activity level) 6. Profit = (Price x Quantity) - (Variable Costs + Fixed Costs) 7. Unit contribution margin = Unit Selling Price - Unit Variable Cost 8. Contribution Margin Ratio = Unit Contribution Margin / Unit Selling Price 9. Break-even point (units) = Fixed Costs / Unit Contribution Margin 10. Break-even point (dollars) = Fixed Costs/CM Ratio 11. Margin of safety Total sales - Break-even sales $1 $2 $3 $4
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