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Fixed cost is 1,50,000 and contribution per unit is 15. The break-even point in units is
A5,000
B15,000
C10,000
D22,500
Answer & Solution
Correct answer: C. 10,000
1. At break-even, total contribution exactly covers fixed cost.
2. Break-even units = fixed cost divided by contribution per unit.
3. = 1,50,000 / 15 = 10,000 units.
4. Check: 10,000 units x 15 contribution = 1,50,000, which equals fixed cost, so profit is nil.
_Source: ICAI Cost and Management Accounting Ch14 'Marginal Costing', section 14.8 illustration_
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