The ratio of variable cost to sales is given to be 50%. The B.E.P. occurs at 75% of sales find the capacity sales when fixed cost are Rs 150000.
Determine profit at 80% and 100% capacity.
Answers
Answer:
sorry don't know
Explanation:
sorry don't know
Solution:
Contribution Ratio or P/V ratio= 1- VC/Sales
= 1-0.50
= 0.50
B.E.P.=Fixed cost/ P/V ratio
= 1,50,000/0.50
= 3,00,000
B.E.P. occurs at 75% of the capacity utilisation =3,00,000 sales.
We can apply proportion method
a. X=3,00,000X80/75
= 3,20,000
Now we can compute, contribution earned when sales is Rs. 3,20,000.
Contribution = Sales × P/V Ratio
= 3,20,000 X 50%
= 1,60,000
Profit = Contribution – Fixed Costs
= 1,60,000- 1,50,000
= 10,000
b. X=3,00,000X100/75
= 4,00,000
Now we can compute, contribution earned when sales is Rs. 4,00,000.
Contribution = Sales × P/V Ratio
= 4,00,000 X 50%
= 2,00,000
Profit = Contribution – Fixed Costs
= 2,00,000-1,50,000
= 50,000.
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