Study questions platform-wide or filter by specific tests with correct answers revealed.
Sales $250,000; Variable production costs $150,000; Fixed production costs $30,000; Gross profit $70,000; Fixed admin costs $50,000; Profit $20,000. What is the break-even point in sales revenue?
Option C ($200,000) is correct.
Contribution = $250,000 − $150,000 = $100,000; CS ratio = 40%
Total fixed costs = $30,000 + $50,000 = $80,000
Break-even sales = $80,000 ÷ 0.40 = $200,000
The classification of costs into fixed and variable categories is a key feature of which costing system?
Marginal Costing (also called variable costing) explicitly separates costs into fixed and variable components. Only variable costs are charged to products; fixed costs are treated as period costs. In Absorption Costing, both fixed and variable overheads are absorbed into product costs without explicit separation. Standard Costing focuses on pre-set cost benchmarks. Direct Costing is essentially another name for marginal/variable costing, but Marginal Costing is the most precise and standard term here.
Sign in to join the conversation and share your thoughts.
Log In to Comment