Question
From the following information calculate the amount of
sales to earn a desired profit of Rs.6,000 Fixed Cost: 12,000 Selling Price: 12 per unit Variable cost: 9 per unitSolution
Sales in value to cover fixed cost and desired profit: Units * SPPU =6000*12 =72,000 Calculation of sales units to cover fixed cost and desired profit: FC + Desired Profit /Contribution per unit (12000+6000)/3 = 6000 Units Calculation of Contribution per unit: SPPU-VC =12-6 =3 Alternatively, Calculate PV ratio first: CPU/SPPU*100 =3/12*100 =25% Sales to cover fixed cost and desired profit: FC + Desired Profit/PV ratio = (12000+6000)/25% = 72000
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