2. In its first year, “ABOL BUNA” Company had the following experience.

Sales = 25,000 units Selling price = Birr 100
Total variable cost = Birr 1,500,000 TFC = Birr 350,000
Required
b) Find the break-even point in terms of quantity

.

Break-even point in terms of quantity = Total Fixed Cost / (Selling Price - Total Variable Cost)

Break-even point in terms of quantity = 350,000 / (100 - 1,500,000)

Break-even point in terms of quantity = 5,000 units

To find the break-even point in terms of quantity, we need to calculate the number of units that need to be sold in order to cover all the fixed costs.

The formula to calculate the break-even point in terms of quantity is:
Break-even quantity = Total Fixed Costs / Contribution Margin per unit

First, let's calculate the contribution margin per unit:
Contribution Margin per unit = Selling Price per unit - Variable Cost per unit

Given:
Selling Price per unit = Birr 100
Total Variable Cost = Birr 1,500,000
Sales = 25,000 units

Contribution Margin per unit = Birr 100 - (Birr 1,500,000 / 25,000)
Contribution Margin per unit = Birr 100 - Birr 60
Contribution Margin per unit = Birr 40

Now, let's calculate the break-even point in terms of quantity:
Break-even quantity = Birr 350,000 / Birr 40
Break-even quantity = 8,750 units

Therefore, the break-even point in terms of quantity is 8,750 units.

To find the break-even point in terms of quantity, we need to determine the number of units that need to be sold in order to cover all the fixed costs and variable costs. The break-even point occurs when the total revenue equals the total costs.

Let's break down the costs and revenue components:

- Sales: 25,000 units
- Selling price: Birr 100 per unit
- Total variable cost: Birr 1,500,000
- Total fixed cost: Birr 350,000

First, we calculate the total revenue (TR) by multiplying the sales quantity by the selling price:
Total Revenue (TR) = Sales Quantity * Selling Price
TR = 25,000 * 100 = Birr 2,500,000

Next, we calculate the total cost (TC):
Total Cost (TC) = Total Fixed Cost (TFC) + Total Variable Cost (TVC)
TC = 350,000 + 1,500,000 = Birr 1,850,000

Now, the break-even point can be calculated by dividing the total cost by the selling price per unit:
Break-even point (in terms of quantity) = Total Cost / Selling Price per Unit
Break-even point = Birr 1,850,000 / 100 = 18,500 units

Therefore, the break-even point in terms of quantity for "ABOL BUNA" Company is 18,500 units. At this quantity, the company's total revenue will cover all the costs (both fixed and variable costs) and they will break even.