Total Fixed Costs is 18,000 Total Variable Costs is 30,000 Total Sales is 60,000 Units Sold is 20,000 Find out (a) contribution per unit, (b) break-even point, (c) margin of safety, (d) profit, and (e) volume of sales to earn a profit of Rs.24, 000.
Answers
Answer:
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Answer:
(a) Contribution per unit = Rs. 1.50
(b) Break even point(units) = 12,000 units
Break even point(Rs.) = Rs. 36,000
(c) Margin safety = Rs. 24,000
(d) Profit = Rs. 12,000
Explanation:
GIVEN:
Total Fixed Costs(FC) = 18,000
Total Variable Costs(VC) = 30,000
Total Sales = 60,000
Units Sold = 20,000
SOLUTION:
(a) Contribution per unit:
Contribution per unit = Selling price per unit - variable cost per unit
CPU = Rs. 60,000/Rs. 30,000 - Rs. 30,000/Rs. 20,000
= Rs. 3 - Rs. 1.50
CPU = Rs. 1.50
(b) Break even point:
BEP(units) = Fixed cost / CPU
= 18,000 / 1.50
BEP(units) = 12,000 units
BEP(Rs.) = FC/CPU x SPU
= 18,000/1.50 x 3
BEP(Rs.) = Rs. 36,000
(c) Margin safety:
MS = Actual Sales - B.E.Sales
= 60,000 - 36,000
MS = Rs. 24,000
(d) Profit:
Profit = Contribution - Fixed cost
= (20,000 x 1.50) - 18,000
= 30,000 - 18,000
Profit = Rs. 12,000
P/V Ratio:
P/V Ratio = C / S x 100
= 1.50 / 3 x 100
= 50%