Question

Q.12
The following information is given by Star Ltd. :
Margin of Safety
1,87,500
Total Cost
1,93,750
Margin of Safety
3,750 units
Break-even Sales
1,250 units
Required:
Calculate Profit, P/V Ratio, BEP Sales (in ₹ ) and Fixed Cost.​

Answer 1

Answer:

To calculate a break-even point based on units: Divide fixed costs by the revenue per unit minus the variable cost per unit. The fixed costs are those that do not change no matter how many units are sold. The revenue is the price for which you're selling the product minus the variable costs, like labor and materials.

Answer 2

Answer:

Profit Rs 56,250

P/V ratio 15%

BEP sales = Rs 62,500

Fixed cost  = Rs. 9,375

Explanation:

Total sales = margin of safety+ break even sales

                  = 3750 units + 1250 units

                  = 5000 units

Selling price = margin of safety/margin of safety units

                     = 187500/3750

                    = Rs 50 per units

Profit= total sales - total cost

      =(5000*50) - 193750

     = 250000-193750

     =Rs 56,250

P/V ratio =Profit / Margin of safety

              =56250/3750

              =  15%

BEP sales  = Total sales - margin of safety

                 = 250000- 187500

                 = Rs. 62500

Fixed cost = BES* P/V ratio

                 = 62500*15%

                 = Rs .9375