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Break Even Analysis - Fit-All Instruments

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The trading results of Fit-All Instruments for its 1st year of operations are expected to be as follows:

Sales (@ R4 per unit) R 320 000
Less:
Material R 120 000
Wages 48 000
Variable Overhead Costs 24 000
Fixed Overhead Costs 50 000 242 000
Profit 78 000

You are required to calculate:
3.1 The break-even point in units.

3.2 The company's margin of safety in units.

3.3 The number of units the company should sell in order to earn a net income of R90 000.

3.4 The price per unit at which they should sell to achieve the same profit in the following year if the total variable cost per unit increased by R0.80.

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The expert examines break even analysis for fit-all instruments. Trading results instruments is determined.

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The trading results of Fit-All Instruments for its 1st year of operations are expected to be as follows:

Sales (@ R4 per unit) R 320 000
Less:
Material R 120 000
Wages 48 000
Variable Overhead Costs 24 000
Fixed Overhead Costs 50 000 242 000
Profit 78 000

You are required to calculate:
3.1 The break-even point in units.

Total contribution Margin per unit = Sales - total ...

Solution provided by:
Gaurav Agarwal, MS
Education
  • BE, Bangalore University, India
  • MS, University of Wisconsin-Madison
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