Costing
This query is : Resolved
11 June 2010
Can any one tell me whether BEP under absorption costing is based on Units sold or Units produced.
11 June 2010
Units sold.
BEP(in units) = Fixed Cost / Contribution Per Unit
BEP(in Rs.) = (Fixed Cost / Contribution Per Unit) * Selling Price Per Unit
or Fixed Cost / PV ratio
BEP(in units) = Fixed Cost / Contribution Per Unit
BEP(in Rs.) = (Fixed Cost / Contribution Per Unit) * Selling Price Per Unit
or Fixed Cost / PV ratio
14 June 2010
I am sure BEP is based on units sold under marginal costing method. Is the answer same also under absorption costing ? The formulae mentioned above apply to marginal costing! do they even apply to absorption costing ?
14 June 2010
YES. CONCEPT OF BREAK EVEN IS SAME IN BOTH.
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