Accounting Multiple Choice Question – 23 August 2023

Alex plc manufactures and sells a single product.

At an output of 1,000 units per month the budget shows:

• selling price – £120,000
• variable cost – £40,000
• fixed cost – £50,000
• Profit – £30,000

Alex plc’s fixed costs are due to increase by £10,000 per month and the selling price will be increased to maintain the profit at £30,000.

What is the effect on the break-even point to the nearest unit?

Select ONE answer:

1. decrease by 42 units
2. increase by 42 units
3. decrease by 125 units
4. no change

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. Correct – BEP £50k / £80 = 625 units == > New BEP £60k / £90 = 667 units == > an increase of 42 units
3. Not correct
4. Not correct

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