Question

The following data is related to a small manufacturing company fixed cost - Rs. 1,60,000 Variable cost - 60% of sales calculate pv ratio bep ratio sales required to earn a profit of Rs. 20,000 Profit at an estimated sales of Rs. 4,40,000 Margin of safety when sales are Rs. 80,000​

Answer 1

Answer:

it was really very easy bro

Fixed cost is 30000/-Rs. PVR 50% , BEP= FIXED COST / PVR = BEP 30000/50%=60000/- Rs.

Answer 2

Answer:(a) Variable cost ratio to sales = 60%

Contribution ratio = (100% – Variable cost ratio)

            = (100% - 60%)

            = 40%.

         Profit Volume Ratio (P/V) = 40%

(b) Break-even Point      = Fixed cost ÷ P/V Ratio

                    = Rs.1,60,000 ÷ 0.6

                    = Rs.2,66,667.

(c) Sales to earn profit of Rs.20,000:

   = (Fixed cost + Desired Profit) ÷ P/V Ratio

   = (Rs.1,60,000 + Rs.20,000) ÷ 0.6

   = Rs.3,00,000

(d) Margin of safety when sales are Rs.8,00,000

   = Actual sales – Break-even sales

   = Rs.8,00,000 – Rs.2,66,667

   = Rs.5,33,333.

Trust you have understood.