Costing

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Ajaib Singh

Ajaib Singh (Querist)
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11 June 2010 Can any one tell me whether BEP under absorption costing is based on Units sold or Units produced.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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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

Ajaib Singh

Ajaib Singh (Querist)
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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 ?

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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14 June 2010 YES. CONCEPT OF BREAK EVEN IS SAME IN BOTH.

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