A Ltd. Has sales of 2,200, total fixed cost of 570, variable cost of 1,540, raw material consumed of ` 1,100, number of units sold 22,000. What shall be the BEP 9 in units) if raw material price is reduced by 2%?
Correct answer: A. 18,387
- A. 18,387
- B. 18,560
- C. 18,750
- D. 19,000
Explanation
After the 2% reduction, material cost per unit becomes 1,100 × 98% ÷ 22,000 = 0.049, making revised variable cost per unit 0.069. Thus BEP units are 570 ÷ (0.10 − 0.069) ≈ 18,387.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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