A company makes a single product and incurs fixed costs of Rs 30,000 per annum. Variable cost per unit is Rs 5 and each unit sells for Rs 15. Annual sales demand is 7,000 units. The breakeven point is:
A. 2,000 units
B. 3,000 units
C. 4,000 units
D. 6,000 units
Answer: Option B
Solution(By Examveda Team)
Break-Even Point (Units) = Fixed Costs ÷ (Revenue per Unit – Variable Cost per Unit)= 30000 ÷ (15 - 5)
= 3000 units.
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BEP sales in unit=fixed cost/contribution p.u
Contribution p.u =sales-variable cost
15-5=10
BEP =30000/10=3000