Monthly Archives: April 2016

Break Even Analysis

Standard

Calculate Break-Even point from the information given below:

Sales = “₹ 1,50,000/-”

Variable Cost = “₹ 1,20,000/-”

Fixed Cost = “₹ 15,000/-”

 

Solution:

 

In this question, Selling price per unit and Variable cost per unit is not given, hence the Break-even point can be calculated by the formula given below:

 

Breakeven point=  (Total Fixed Cost)/(P/V Ratio)

𝑃/𝑉 𝑅𝑎𝑡𝑖𝑜 = C/S  X 100

i.e;  (Sales-Variable Cost)/Sales  X 100

In this question;

𝑃/𝑉 𝑅𝑎𝑡𝑖𝑜 = C/S  X 100

=  (1,50,000-1,20,000)/1,50,000  X 100 = 20%

Breakeven point=  (Total Fixed Cost)/(P/V Ratio)

= 15,000/(20%) = ₹ 75,000/-