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    DRHeckler's Avatar
    DRHeckler Posts: 1, Reputation: 1
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    #1

    Dec 3, 2006, 03:17 AM
    Break even absorption costing
    I am having a fit trying to figure the breakeven point for absorption costing. The question I have is Cost of product is $1.35. Variable costs are $1.05 per unit, fixed production costs are $90,000 per month at a level of 400,000 units. Fixed administrative costs total 30,000. Sales average 400,000 units a month, with planned production of 400,000.
    kellyver's Avatar
    kellyver Posts: 1, Reputation: 1
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    #2

    Dec 12, 2010, 04:56 AM
    1,05+ ((90000+30000):x) =1.35
    120000:0,3 = 400000
    Because there are no fixed overhea cost is the asnwer for both variable and absorptioncosting the same!
    markroberts1989's Avatar
    markroberts1989 Posts: 1, Reputation: 1
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    #3

    Feb 11, 2013, 05:20 PM
    B/E Units = N
    Fixed Manufacturing Overhead Rate (FMOR) = 90,000/400,000 = .225
    Unit Contribution Margin = Sales Price - Variable Costs = 1.35-1.05 =.30
    N= Total Fixed Costs + Target Operating Income + (FMOR(N-Units Produced) / Unit Contribution Margin
    N = (90,000 + 30,000) + 0 (There is no Target Income in this case) + (.225 (N - 400,000) / .30
    N = 120,000 + .225N - (.225 x -400,000) / .30
    N = 120,000 + .225N - 90,000 / .30
    N = 30,000 + .225N / .30
    .30N = 30,000 + .225N
    .075N = 30,000
    N = 400,000
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