What is the value of the variable cost ?
If the break even point is $ 130, the fixed cost is $ 330, selling price per unit is $ 25,and unit of sell is $50.
(3 marks)
Unit of sale is fifty dollars? What does that mean?
i also don't know what it means by unit of sale.so to solve this question no need calculate unit of sale right
To find the value of the variable cost, we need to use the formula for calculating the break-even point:
Break-even point = (Fixed cost + Variable cost) / (Selling price per unit - Unit variable cost)
Given that the break-even point is $130, the fixed cost is $330, the selling price per unit is $25, and the unit of sell is 50, we can substitute these values into the formula:
$130 = ($330 + Variable cost) / ($25 - $50/Unit variable cost)
To simplify the equation, we can first calculate the unit variable cost:
Unit variable cost = Selling price per unit - Break-even point / Unit of sell
Unit variable cost = $25 - $130/50
Unit variable cost = $25 - $2.60
Unit variable cost = $22.40
Now, we can substitute the values into the formula:
$130 = ($330 + Variable cost) / ($25 - $22.40)
To solve for the variable cost, we can cross-multiply:
$130 * ($25 - $22.40) = $330 + Variable cost
$130 * $2.60 = $330 + Variable cost
$338 = $330 + Variable cost
Variable cost = $338 - $330
Variable cost = $8
Therefore, the value of the variable cost is $8.