Answer:
Fixed Costs.........................234,000
Fixed costs at Break even point will be equal to Contribution value.
Explanation:
Bonita Industries is planning to sell 780,000 units for $1.50 per unit.
The contribution margin ratio is 20%. If Bonita will break even at this level of sales, what are the fixed costs
Sales 780, 000 x 1.50 = 1,170,000
Variable costs @ 80% = 936,000
Contribution @ 20% = 234,000
Fixed Costs.........................234,000
Profit .................................... NIL
Answer:
The fixed costs for Bonita Industries are $234000
Explanation:
Break Even Point is when Bonita Industries neither makes a profit or a loss.
The Break Even Point in Units is Calculated as follows:
B.E.P=Fixed Costs/Contribution per unit
It is already given that Bonita will break even at 780000
The Break Even Point in Revenue terms is Calculated as follows:
B.E.P=Fixed Costs/contribution margin ratio
Break Even Point in Revenue terms is = $ 1170000 ($1.50×780000)
The Missing Figure is now the Fixed Cost which is calculated as
Tip : Make Fixed Costs the Subject of formula
Fixed Cost = Break Even Point in Revenue× contribution margin ratio
=$ 1170000×20%
=$234000
