Question

The contribution to sales ratio of a company is 20% and profit is ₹ 64,500. If the total sales of the company are ₹ 7,80,000, the fixed cost is

Answer 1

The fixed cost is 91,500

Step by step:-

P/V Ratio is 20 %

Profit = 64,500

Total sales of company = 7,80,000

Fixed Cost =Sales * P/V Ratio - Profit

=(780000-0.2)*100

=156000-64500

=91,500

• Hence , the fixed cost is 91,500 Rs

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Answer 2

Answer:

The fixed cost is ₹ 91,500

Explanation:

Given :

• P/V Ratio = 20 %
• Profit = Rs 64,500
• Total sale = Rs 7,80,000

To find :

• The fixed cost

Solution :

P/V Ratio = Profit Volume Ratio

P/V Ratio = Contribution × 100 / sales

Fixed cost :

★ Method (I) :

Fixed cost = Total contribution - Profit

⇒ (7,80,000 × 20 / 100) - 64,500

Total contribution = Rs 1,56,000

⇒ 1,56,000 - 64,500

⇒ 91,500

★ Method (II) :

Fixed cost = Sales × P/V Ratio - profit

⇒ (7,80,000 × 0.2) - 64,500

⇒ 1,56,000 - 64,500

⇒ 91,500

Therefore,

The fixed cost is ₹ 91,500