A company sells units at £90 each. The units have a total absorption cost of £81 each, based on budgeted sales of 14,000 units and fixed costs of £14,000. How many units does the company need to sell if it is to break even
From United States , Cambridge
Total cost of goods sold based on budget: 14000*81 = 1134000
absorption cost includes all costs including fixed costs
therefore absorption cost per unit=81
break even = (total cost = total sale)
total cost = 1134000
total sale = 1134000/90 = 12600 units
therefore, company needs to sell 12600 units assuming whatever is produced is sold and there is no closing stock.
Please correct me if i am wrong.

From India , Pune

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