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Calculate break even in units; cost of materials used in process 2 during the month

A company has fixed costs of $5000. Sales for 600 units have been made. The budgeted unit details are

Selling price $ 26
Varible cost $19
Fixed cost $ 2

Profit $ 5

At what minimum price should an order for 200 additional units be accepted in order to break even.

A $19 B $23 C $24 $ 26

Q The manufacture of a product involves two processes. The costs for the processes for one month are given.

Process one Process 2

Material used $4000
Additional materials $ 2000
Other variable costs $5000 $1000
Fixed costs $3000 nil

There were no opening or closing stocks of materials or work in progress at the beginning or end of the month. All process 1 production was passed to process 2 in the month.

What is the cost of the materials used in process 2 during the month?
A $2000 B $6000 C $12000 D $14000

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Solution Preview

Question 1 - First of all you need to figure how much of the fixed costs have already been covered in this problem. The total sales is (600 x $26 = $15,600) and the total variable cost so far is (600 x $19 = $11,400). Subtracting one from the ...

Solution Summary

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