Page 7 - PowerPoint Presentation
P. 7
COST VOLUME PROFIT ANALYSIS
Suggested Solution
(a) Breakeven point in units
= Total fixed costs / weighted contribution per unit
= 2 431 000 / 79.78
= 30 472 units
Fixed costs:
Factory overhead (R1 385 000 x 60%) = R 831 000
Selling and admin (R2 400 000 x 2/3) = R1 600 000
R2 431 000
Contribution per unit: Product LD Product SO
Sales 200 100
Direct material (60) (40)
Direct labour (20) (10)
Variable factory overhead (40%) (10) (5)
Variable selling and admin (1/3) (15) (7.5)
Contribution per unit 95 37.5
Weighted contribution = (95 x 50 000 / 68 000) + (37.5 x 18 000 / 68 000)
= 79.78 per unit
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