Question
A manufacturing company sells a product for ₹500 per
unit. The variable cost per unit is ₹300, and the fixed costs are ₹12,00,000 annually. Management wants to assess the minimum number of units to be sold to avoid losses. Additionally, they want to know the sales revenue needed to achieve a profit of ₹3,00,000.Solution
• Contribution/unit = 500 – 300 = ₹200. • BEP units = 12,00,000 ÷ 200 = 6,000 units. • Units for ₹3L profit = (12,00,000 + 3,00,000) ÷ 200 = 7,500 units → Sales = 7,500 × 500 = ₹37,50,000
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