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Break-Even Analysis Examples and Solutions

The document outlines the calculation of break-even points for three scenarios involving fixed costs, variable costs, and selling prices. In scenario (a), the break-even point is determined to be 10,000 units, while in (b) it is Rs. 5,000, and in (c) it is Rs. 3,000. The calculations utilize contribution margins and profit-volume ratios to arrive at these break-even points.

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12 views1 page

Break-Even Analysis Examples and Solutions

The document outlines the calculation of break-even points for three scenarios involving fixed costs, variable costs, and selling prices. In scenario (a), the break-even point is determined to be 10,000 units, while in (b) it is Rs. 5,000, and in (c) it is Rs. 3,000. The calculations utilize contribution margins and profit-volume ratios to arrive at these break-even points.

Uploaded by

charleschirwa477
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Problem 5.

Find out break-even point from the following: (a) Fixed cost Rs. 20,000, Variable cost Rs. 2 per unit,
Selling price Rs. 4 per unit. (b) Sales Rs. 6,000, Variable cost Rs. 3,600, Fixed cost Rs. 2,000. (c) Sales Rs.
4,000, Variable cost Rs. 2,400, Profit Rs. 400. (8. Com., Calicut)

Solution (a) Contribution = Selling price - Variable cost = 4 - 2 = Rs. 2.

B.E. Point

F.C 20,000 . Contribution =-2- = 10,000 unIts.

(f.) Contribution = S - V ~. 6,000 - 3,600 = Rs. 2,400

C 2,400 x 100 =-- >: 100 = 40% S 6,000

PlY ratio

Marginal Costing

B. E. Point

F.C 2,000 p " V ratio = 40% = Rs. 5,000 (c) Contribution = S - V = 4,000 - 2,400 = Rs. 1,600

1.600 PI V ratio = 4,000 x 1 00 ~ 40%

Fixed cost = Contribution - Profit = 1,600 - 400 = Rs. 1,200.

F.C 1,200 40% = Rs. 3,000

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