Accounting 9706 · AS & A Level · Costs and cost behaviour

Costs and cost behaviour — practice question

A business produces and sells just one kind of product. The information given is as follows, per unit: Selling price: $\$10.80$ Direct material: $\$2.20$ Direct labour: $\$4.20$ This business also incurs a semi-variable overhead linked to this product. The overhead is $\$32\,000$ at an output level of $20\,000$ units, and increases to $\$40\,000$ when output reaches $40\,000$ units. At what output level is the break-even point for this product?

  • A$5455$ units
  • B$6000$ units
  • C$7273$ units
  • D$8000$ units

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