22.15. Numerical Example

Try these first

1. 1.

   If the fixed cost is ₹60,000 and contribution per unit is ₹120, how many units must be sold to break even?

   Hint

   Use the break-even formula: Fixed Costs / Contribution per Unit.

2. 2.

   Calculate contribution per unit if selling price is ₹300 and variable cost is ₹180.

   Hint

   Contribution is selling price minus variable cost.

3. 3.

   What is the formula for calculating the Break-even Point in units?

   Hint

   Recall that BEP relates fixed costs to the contribution made by each unit.

4. 4.

   True or False: The contribution margin is calculated by subtracting fixed costs from selling price.

   Hint

   Focus on what costs are involved in the calculation.

5. 5.

   A company incurs fixed costs of ₹60,000. Their product has a selling price of ₹450 and a variable cost of ₹270. Determine the break-even point in units and total revenue.

   Hint

   Calculate contributions first, then apply the BEP formula.

6. 6.

   If a bakery has fixed costs of ₹80,000 and sells cookies for ₹200 each with variable costs of ₹80, find how many cookies they need to sell to achieve a profit of ₹40,000.

   Hint

   Sum fixed costs and desired profit before dividing by contribution.