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CH-5: BUSINESS ARITHMETIC

                                                    CODE: 241605010111


               TOPIC: - COSTING (UNIT COST, UNIT PRICE, GROSS MARGIN AND BREAK-EVEN)

               NOTES:

                   1.  Unit of sale:
                       It can be defined as the measure of unit in which the goods and services are sold. E.g. Apple –
                       Kilogram, Milk – Liter, Coaching class – Hour, Estate Dealer – Per Sq.ft., Shopping Malls – No.of
                       Customers.

                   2.  Unit Cost:
                       It can be defined as the cost incurred by an organization to produce store and sell one unit of
                       goods and services. Unit  cost refers to variable cost or actual cost of production.

                   3.  Unit Price:
                       It is the price at which one unit of goods is sold. So far a business, it is known as selling price.
                       For a business dealing in multiple products, unit price is the average amount billed per
                       customer.
                       Unit Price = Total billed amount / No. of customers

                   4.  Gross Profit:
                       Excess of unit price over unit cost.
                       Gross Profit per unit = Unit Price – Unit cost.

                   5.  Break-even analysis:
                       It refers to a system of determination of that level of activity where total cost equals total selling
                       price.
                       Break-even level :  Total revenue = Total expenses.

                   6.  Contribution = Selling price – Variable cost.

                   7.  BEP for a single product = Fixed expenses / Contribution per unit.

                   8.  BEP for multiple product = Fixed expenses / WACPU
                       WACPU = Weighted average contribution per unit
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