Question

The following statement of cost and sales of sharma and brothers
Filed cost- 180000
Variable
- 280000
Net sales - 420000
Determine how much sales valume is to be increased in order for the company to break ever

Answer 1

120000 Sales volume to be increased or about 28.57 %  increase for break even point

Given:

Fixed cost = 180000

Variable cost = 280000

Net Sales  = 420000

To Find:

Sales volume is to be increased in order for the company to break even

Solution:

Contribution  Marginal Profit for 420000 sales

= Net Sales - Variable cost  

= 420000 - 280000

= 140000

For Break even Contribution  Marginal Profit should be equal to Fixed cost 180000

For 140000 Profit,    Sales  = 420000

For 1 Profit, Sales = 420000/140000 = 3

For 180000 Profit , Sales = 180000 x 3 = 540000

Increase in Sales = 540000 - 420000 = 120000

120000 Sales volume to be increased

Sales Volume increased = (120000/420000) * 100 ≈ 28.57 %