Question

Following particulars has been shared for you. If fixed cost is Rs500000, selling price is Rs60 and Variable cost is Rs20

a. Calculate and describe -Breakeven point (5 Marks)

b. What could be the sales number to earn a profit of Rs 50000, at a Fixed Cost Rs 200000, Variable Cost Rs30 per unit, Selling Price Rs 60 per unit (5 Marks)

Answer 1

a.Break- even point$=$ Fixed Costs$÷($ Sales per unit$-$ Variable cost per unit$)$

$=Rs500000÷(60-20)$

$= 12,500$ units

b. $TR-TC=TP$

$60Q-200000-30Q=50000$

$30Q=$ $250,000$

$Q=8,333.33$ units