Page 66 - P1 Integrated Workbook STUDENT 2018
P. 66
Chapter 4
Margin of safety
The break-even point is the point at which the lines cross = 400 units.
MOS = planned units – break even units = 1,200 – 400 = 800
As a % = MOS in units/planned sales × 100
= 800/1,200 × 100 = 66.7%
Variable cost per unit
Break even units = fixed costs/contribution per unit
400 = $2,400/contribution per unit
Contribution per unit = $2,400/400 = $6
Sales price – variable costs = contribution
Variable cost = sales price – contribution = $10 – $6 = $4 per unit
Illustrations and further practice
Now try examples 2 and 3 from Chapter 5.
62
