- 1 Marks
Question
You are given the following data:
| Description | Amount (₦) |
|---|---|
| Budgeted sales | 500,000 |
| Budgeted contribution | 200,000 |
| Budgeted profit | 50,000 |
The break-even sales is:
A. ₦475,000
B. ₦450,000
C. ₦375,000
D. ₦350,000
E. ₦125,000
Answer
Answer: C
Explanation:
To calculate the break-even sales:
Fixed Costs = Contribution − Profit = ₦200,000 − ₦50,000 = ₦150,000
Contribution Margin Ratio (CMR) = Contribution / Sales = ₦200,000 / ₦500,000 = 0.4
Break-Even Sales = Fixed Costs / CMR = ₦150,000 / 0.4 = ₦375,000.
- Tags: Break-Even Point, CVP Analysis, Fixed Costs, Sales
- Level: Level 1
- Topic: Cost-Volume-Profit (CVP) Analysis
- Series: MAY 2021
- Uploader: Kwame Aikins