Day: January 24, 2021

A company makes three products for which the following details are given. 

1. Selling price – £100 per unit
2. Direct materials – £40 per unit
3. Direct labour – £30 per unit

Total fixed costs are £40,000.

Planned production is 1,000 units.

Which action should the company take to break-even from the table below? 

Select ONE answer:

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. CorrectCorrect – £40 * 0.75 = £30 + £30 ==> £60 costs ==> £100 – £60 = £40 CM ==> TFC £40,000 / £40 CM = 1,000 units BEP
3. Not correct
4. Not correct

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