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What happens if the price per unit decreases because of competition but the cost structure remains the same?
If the price per unit decreases because of competition but the cost structure remains the same
How do you calculate breakeven analysis?
Fixed cost / (selling price - Variable cost per unit) --> Fixed cost ----------------------------------------------- (Selling Price - Variable Cost Per Unit)
If the price per unit decreases because of competition but the cost structure remains the same will the breakeven point rise?
Yes breakeven point will rise because contribution margin per unit reduces that's why more units require to recover fixed cost.
Is selling price and total variable cost the same?
Selling price = Total Cost (Total Variable cost + Total fixed cost) + profit margin
If a firm has fixed costs of 20 000 variable cost per unit of 50 and a break even point of 5000 units the price is?
We have to fine the Selling Price. Given: BEP=5000 units VC=Rs.50/unit FC=Rs.20000 BEP=FC divided by Contribution/unit therefore, contribution/unit = 20000 divided by 5000 = Rs.4/unit therefore, selling price= variable cost - contribution/unit = 20+4 = 24
