Question

use numerical method to calculate BEP of a wine company that sells a 1000 litres of wine per week at R12 per litre. They produce the wine at R8 per litre and their total fixed cost to operate their plant and to produce their wine is R2000 per week. What is the Net Profit of the company?​

Answer 1

Answer:

BEP : 500 units

Profits : R2000

Explanation:

BEP or break-even point = fixed costs/ contribution margin per unit.

Fixed costs = R2000

Contribution margin per unit = selling price - variable costs

Contribution margin per unit = R12- R8 =R4

BEP = 2000/4

BEP = 500 units

profits will be the units sold after BEP x contribution margin

=1000-500

=500

profits will be

=500 x 4

=2000