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Useful ADM1300 Accounting Notes.pdf

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BreakEven Accounting and Ratios for ADM1300 Fixed Costs Costs that do not vary with level of production office salaries rent insurance depreciationVariable Costs Costs that do vary with the level of production sales commission overtime payments direct labour electricity2 Types of BreakEven Questions 1 Breakeven inamounts2 Breakeven in unit amounts Unit Contribution isSelling price per unit SPVariable cost per unit VC Break Even Examples 1Therefore the breakeven point is 400000 Samoon Azimi All Rights Reserved Lool2 The key word here is units therefore we have to use the second formulaThe fixed costs are the sum of all the fixed costs givenYearly Insurance Expense60000Yearly Rent Expense12000Annual Salaries130000 Add them together202000 Unit ContributionSP per unitVC per unit Selling price per unit SP1000 VC sum of all the variable costsWages per unit 225Overhead costs per unit 200Raw materials per unit 325 total750 So Unit contributionSP 1000VC 750250We can finally solve Therefore 80800 units must be sold to break even Samoon Azimi All Rights Reserved Lool
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