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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 1…

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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:
  • A2,000 units
  • B3,000 units
  • C4,000 units
  • D6,000 units
Correct answer: B
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Discussion 1

0
CCommunity
3,000 units

Break-Even Point (Units) = Fixed Costs ÷ (Revenue per Unit – Variable Cost per Unit)
= 30000 ÷ (15 - 5)
= 3000 units.