A product sells for Rs. 50 per unit, has a variable cost of Rs. 30 per unit, and total fixed costs are Rs. 120,000. What is the break-even output?
Correct answer: B. 6,000 units
- A. 4,000 units
- B. 6,000 units
- C. 8,000 units
- D. 10,000 units
Explanation
Contribution per unit is Rs. 50 minus Rs. 30, or Rs. 20. Break-even output is Rs. 120,000 divided by Rs. 20, which equals 6,000 units.
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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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