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Costing

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

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CMA. CS. Sanjay Gupta (Expert)
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
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Ajaib Singh

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Ajaib Singh (Querist)
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 ?
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CMA. CS. Sanjay Gupta

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