you are required to compute P/V ratio B.E.P and margin of safety from the following data: Sales(1,00,000 units ) ₹200000 Variable cost ₹80,000. fixed cost. ₹40000 ,Also evaluate the effect of (a)20% increase in variable costs and (b) 20% increase in quantity sold on the above mentioned three measures.
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5.6 Break – Even Point for a single product
Finding the break-even point
A company breaks even for a given period when sales revenue and costs charged to that period are equal. Thus, the break-even point is that level of operations at which a company realizes no net income or loss.
A company may express a break-even point in dollars of sales revenue or number of units produced or sold. No matter how a company expresses its break-even point, it is still the point of zero income or loss. To illustrate the calculation of a break-even point watch the following video and then we will work with the previous company, Video Productions.
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