Discuss AACE International CCP Exam Topic 4 Question 20

SCENARIO: A can manufacturing company requested you to provide data for their decision making The unit prices of the can varies but an average selling price of $0.55 cents and average cost of S45 cents is estimated.

The monthly fixed costs are:

Rant-$1,500

Wages - $4.000

Miscellaneous fixed expenses - $500

If there is an additional variable cost of $0.02 per unit, the monthly break even units are:

A40,000 units

B48,500 units

C75,000 units

D60,000 units

Suggested Answer: D

To calculate the break-even point, we need to determine how many units must be sold to cover all fixed and variable costs. The formula to calculate the break-even point in units is:

Break-evenunits=TotalFixedCostsSellingPriceperUnitVariableCostperUnit\text{Break-even units} = \frac{\text{Total Fixed Costs}}{\text{Selling Price per Unit} - \text{Variable Cost per Unit}}Break-evenunits=SellingPriceperUnitVariableCostperUnitTotalFixedCosts

Given:

Selling Price per Unit = $0.55

Variable Cost per Unit = $0.45 + $0.02 = $0.47

Contribution Margin per Unit = $0.55 - $0.47 = $0.08

Total Fixed Costs:

TotalFixedCosts=1500+4000+500=6000\text{Total Fixed Costs} = 1500 + 4000 + 500 = 6000TotalFixedCosts=1500+4000+500=6000

Break-even units:

Break-evenunits=60000.08=75,000units\text{Break-even units} = \frac{6000}{0.08} = 75,000 \text{ units}Break-evenunits=0.086000=75,000units

Therefore, the correct answer is C. 75,000 units.

Get Premium CCP Questions as Interactive Web-Based Practice Test or PDF Real Exam Format Detailed Explanations Instant Access Get Your Practice Test

37 comments · newest first

Rosio 11 months ago

Not sure about those numbers, feels off to me.

Chu 11 months ago

Agreed, 60,000 units sounds right with those costs.

Simona 11 months ago

Wait, how do we get to 75,000 units? That seems way too high!

Lauran 12 months ago

I think the break-even point is definitely around 60,000 units.

Shaun 12 months ago

The average selling price is $0.55 and cost is $0.45.

Fernanda 1 year ago

I think I did a question like this where we had to find the break-even units. I remember the fixed costs were $6,000 total, but I can't remember how to apply it here.

Avery 1 year ago

If I recall correctly, the contribution margin would be $0.55 - $0.45 - $0.02, which gives us $0.08 per unit. That sounds right, but I'm not confident about the final calculation.

Yuette 1 year ago

I'm a bit unsure about the variable costs. Is the $0.02 added to the $0.45 cost or is it separate? I feel like I practiced a similar question but can't recall the details.

Desmond 1 year ago

I think I remember that to find the break-even point, we need to calculate the total fixed costs and divide that by the contribution margin per unit.

Cecil 1 year ago

This is a classic problem, but I want to make sure I don't miss anything. I'll double-check my work to ensure I have the right approach and the correct answer.

Nicolette 1 year ago

Okay, I think I've got this. The key is to find the contribution margin per unit, which is the selling price minus the variable cost per unit. Then I can use that to calculate the break-even units.

Camellia 1 year ago

Hmm, I'm a bit unsure about how to approach this. I know we need to find the break-even point, but I'm not sure if I'm missing any steps in the calculation.

Scarlet 1 year ago

This looks like a straightforward break-even analysis problem. I'll need to calculate the contribution margin per unit and then use that to find the break-even units.

Tien 2 years ago

Hmm, this is a piece of cake. Just need to plug in the numbers and do some simple arithmetic. *yawns*

Kanisha 2 years ago

C? Really? I'd like to see the math on that one. Must be cooking the books or something.

Glen 2 years ago

↳ replying to Kanisha

D) 60,000 units

Malcom 2 years ago

↳ replying to Kanisha

C) 75,000 units

Twana 2 years ago

↳ replying to Kanisha

B) 48,500 units

Devora 2 years ago

↳ replying to Kanisha

A) 40,000 units

Paulina 2 years ago

B sounds about right. Though I'm surprised they didn't throw in a trick question just to mess with us.

Glory 2 years ago

↳ replying to Paulina

B) 48,500 units

Chantell 2 years ago

↳ replying to Paulina

A) 40,000 units

Emiko 2 years ago

Why do you think it's 60,000 units?

Carli 2 years ago

I disagree, I believe the answer is D) 60,000 units.

Salley 2 years ago

I'm going with D. Gotta factor in those fixed costs to get the right breakeven point.

Leila 2 years ago

↳ replying to Salley

Yeah, you have to consider all the costs to determine the break-even point. D seems like the right choice.

Vernell 2 years ago

↳ replying to Salley

I think D is the correct answer too. Those fixed costs really make a difference.

Elfriede 2 years ago

A? That's way too low. The variable cost alone would make it higher than that.

Leonor 2 years ago

↳ replying to Elfriede

That makes more sense. Thanks for clarifying.

Jeannetta 2 years ago

↳ replying to Elfriede

So, the correct answer is D) 60,000 units.

Elmer 2 years ago

↳ replying to Elfriede

Yeah, I agree. The variable cost would definitely push the break even units higher.

Queen 2 years ago

↳ replying to Elfriede

I think it's D) 60,000 units.

Teresita 2 years ago

↳ replying to Elfriede

D) 60,000 units

Arletta 2 years ago

↳ replying to Elfriede

C) 75,000 units

Detra 2 years ago

↳ replying to Elfriede

B) 48,500 units

Shawna 2 years ago

↳ replying to Elfriede

A) 40,000 units

Emiko 2 years ago

I think the answer is C) 75,000 units.

AACE International CCP Exam - Topic 4 Question 20 Discussion