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    Question

    If the PV ratio us 80% and MOS is 20000. Calculate FC if

    SP per unit is 5 and  Contribution is 40000.  
    A 24000 Correct Answer Incorrect Answer
    B 20000 Correct Answer Incorrect Answer
    C 15000 Correct Answer Incorrect Answer
    D 17500 Correct Answer Incorrect Answer

    Solution

    Contribution/ PV ratio = Sales = 50000 and Sales – MOS = Break Even Sales Now, Variable Cost per unit = 5*(1-80%) = 1, therefore, contribution per unit = 4 and FC =  4*BE units = 4 * 30000/5 = 24000  

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