A manufacturer sells his product at Rs. 10 each. Variable costs are Rs. 4 per unit and the fixed costs amount to Rs. 60,000,
(a) Calculate the Break-even point.
(b) What would be the profit, if the firm sells
40.000 units.
(c) What would be the BEP if the firm spends Rs. 5,000 on advertising?
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Contribution desired = Fixed cost + Desired Profit = 30,000 + 50,000 = 80,000 b. Calculation of contribution by producing 40,000 units. Contribution per unit = Selling price – Marginal cost = 3.00 – 1.50 = 1.50 c.
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