ABC Inc. Manufactures biotech sunglasses. The variable materials cost $1.43 per unit and the variable labour cost is $2.44 per unit.
a)
Variable cost per unit = Variable material cost + variable labour cost
Variable cost per unit = $1.43 + $2.44
Variable cost per unit = $3.87
b)
Total variable cost = Variable cost per unit * units
Total variable cost = $3.87 * 320,000
Total variable cost = $1,238,400
Total costs = Total variable costs + total fixed costs
Total costs = $1,238,400 + $650,000
Total costs = $1,888,400
c)
Cash break even point = Fixed costs / price - variable costs
Cash break even point = $650,000 / 10 - 3.87
Cash break even point = 106,036 units
Accounting break even point = (fixed costs + depreciation) / price - variable
Accounting break even point = (650,000 + 190,000) / 10 - 3.87
Accounting break even point = 840,000 / 6.13
Accounting break even point = 137,031 units
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