Question

calculate Break even sales
Variable cost = 800000
fixed cost = 300000
profit = 100000

also please explain how you got the answer. Thank you :) ​

Answer 1

Answer:

BEP = 9,00,000

Explanation:

sales - variable cost = contribution

or fixed cost + profit = contribution

or sales - variable cost = fixed cost + profit

contribution = fixed cost + profit

= 3,00,000 + 1,00,000 = 4,00,000

sales = contribution + variable cost

= 4,00,000 + 8,00,000 = 12,00,000

PVR = contribution / sales × 100

= 4,00,000 / 12,00,000 × 100 = 33.3333%

BEP = fixed cost / PVR

= 3,00,000 / 33.3333% = 9,00,000

Answer 2

Break even sales = 9,00,000

Explanation:

Given:

Variable cost = 8,00,000

Fixed cost = 3,00,000

Profit = 1,00,000

Computation of contribution

Contribution = Fixed cost + Profit

Contribution = 3,00,000 + 1,00,000

Contribution = 4,00,000

Computation of Sales

Sales = Contribution + Variable cost

Sales = 4,00,000 + 8,00,000

Sales = 12,00,000

Break even sales = [fixed cost / (contribution / sales)]

Break even sales = [3,00,000 / (4,00,000 / 12,00,000)]

Break even sales = [3,00,000 / (0.3333)]

Break even sales = 9,00,000

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