ICAEW BIP · Chapter 11 · Question 2 of 10
A product sells for £40 and has a variable cost of £26 per unit. Fixed costs are £189,000. What is the breakeven revenue?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) £540,000
Explanation
Contribution per unit = £40 - £26 = £14. C/S ratio = £14 / £40 = 35%. Breakeven revenue = fixed costs / C/S ratio = £189,000 / 0.35 = £540,000. 13,500 would be the breakeven point in units, not £.
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