Question

The equation for finding the breakeven point may be written as:

Question 39 options:

A)

S+FC=VC

B)

S-VC-FC=0

C)

S+VC+FC=0

D)

VC-FC=S

For every unit that a company produces and sells above the breakeven point, its profitability is improved (ignoring taxes) by the units:

Question 40 options:

A)

Selling price minus fixed cost

B)

Gross margin

C)

Variable cost

D)

Contribution margin

If the selling price is increase by $10 and the total fixed expenses are decreased by $53,472 and variable cost per unit is increased to $66 what will the new breakeven point be in units (rounded)

Question 48 options:

A)

17,710

B)

21,659

C)

23,639

D)

19,678

Answer 1

Q39) Answer is (B) S - VC - FC =0

At Break even point, profit = 0.

Profit is 0 when sales - expenses = 0

i.e sales - variable cost - fixed cost = 0

Q40) Answer is (D) Contribution margin

Since at break even point, Contribution = Fixed cost (i.e profit = 0), the entire fixed cost is covered. The extra sales above break even point, profitability is increased by the units in contribution margin (Sales - V.C = Contribution). As fixed cost is already covered, the additional sales above BEP makes contribution margin = profit.

Q48) The question is incomplete as previous selling price is not given, previous fixed cost is not given . AS a result we cannot calculate contribution margin which is needed in calculating break even point.