Day: March 29, 2021

A company has a product which sells for £1 per unit. The variable costs are £0.60 per unit, and production of 200,000 units is planned.

Fixed costs are £0.20 per unit at the budgeted production level. 

What is the break-even level?

Select ONE answer:

1. 40,000 units
2. 66,667 units
3. 100,000 units 
4. 160,000 units

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 3

1. Not correct
2. Not correct
3. Correct ==> (£1 – £0.6 = £0.4 CM) ==> £0.2 / £0.4 = 50% @ 200,000 units = 100,000 units BEP
4. Not correct

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