From the following data calculate (i) P/V Ratio (ii) Profit
when sales are Rs.20,000 and (iii) the new Break-Even
Point, if the selling price is reduced by 20%
Fixed expenses Rs. 4,000
Break-Even-Pont Rs. 10,000
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Answer Posted / sandeep kumar thakur
Herez the correct answers/solutions
1) P/V ratio
F.C (Fixed expenses/cost). = 4,000
B.E.P = 10,000
B.E.P =. F.C / P/V ratio × 100
10000 = 4000/pV ratio × 100
Pv ratio = 4000/10000 × 100
Pv ratio = 40% (solved)
2). Profit when sales are 20000
P/v ratio = F.c + profit / sales × 100
40 = 4000 + profit /20000 × 100
20000 × 40 = 4000+ profit × 100
8,00000/100 = 4000 + profit
8000 = 4000 + profit
Or, profit = 8000-4000 = 4000 (solved)
Now part 3 = New BEP if selling price reduced by 20%
{
For this one no one gave correct answer
Herez the trick
As we know , sales = F.c + V.C + profit(or - loss)
(F.c fixed cost , VC variable cost )
Therefore Selling price above was 20000 and profit was 4000 (solved in part 2 and FC was 4000)... Therefore
20000 = 4000 + V.c + 4000
I.e V.c = 12000 }
So now. We have
Fc = 4000
VC = 12000
SALES = 16000 (i.e 20% reduced as asked in part 3 )
Now new B.E.P = F.C / Sales - V.C ×. Sales
{ there r more than one formulaes to calculate BEP)
New B.E.P = 4000/16000- 12000× 16000
New B.E.P = 4000/ 4000 × 16000
New B.E.P = 1 × 16000
So when sales r 16000 B.E.P will be on 16000.
16000 is a point of no profit no loss.
Veridication :-
Sales =. FC + VC + profit (or - loss)
16000 = 4000 + 12000 + 0
16000 = 16000
Therefore its correct.
| Is This Answer Correct ? | 85 Yes | 15 No |
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