CA Intermediate · Cost and Management Accounting · Marginal Costing
Rohan Plastics sells a product at ₹80 per unit. Variable cost is ₹52 per unit and fixed cost is ₹2,10,000 per period. What is the break-even point in units?
The break-even point is 7,500 units. Contribution per unit is ₹80 minus ₹52, which is ₹28, and dividing fixed cost of ₹2,10,000 by this contribution gives 7,500 units, where total contribution exactly equals fixed cost.
- A7,500 unitsCorrect
- B2,625 units
- C10,500 units
- D4,038 units
Explanation
Contribution per unit = 80 - 52 = ₹28. Break-even units = 2,10,000 / 28 = 7,500 units. Check: 7,500 x 28 = 2,10,000. Dividing by selling price gives 2,625, which wrongly ignores variable cost.
Did you get it right without looking?
One question tells you little. A timed set on Marginal Costing shows your real accuracy, how long you take and where you lose marks.
More Marginal Costing questions
- Ganga Foods has sales of ₹12,00,000, variable costs of ₹7,20,000 and fixed costs of ₹2,40,000. What is its margin of safety in rupees?
- Meenakshi Appliances makes two products with a limited machine capacity of 6,000 hours. Product P: selling price Rs 100, variable cost Rs 60…
- Which of the following is treated as a period cost, and therefore not included in the value of closing stock, when a firm values its invento…
- Sundaram Pumps has sales of Rs 12,00,000, variable costs of Rs 7,20,000 and fixed costs of Rs 3,00,000. What is its margin of safety ratio?
- Pioneer Tools produced 10,000 units and sold 8,000 units in a year at Rs 120 per unit. Variable cost is Rs 70 per unit and fixed production …
- Arjun Ltd has sales of Rs 12,00,000, a P/V ratio of 30% and fixed costs of Rs 2,40,000. What is its margin of safety in rupees?