Question

    What will be the fixed cost for the year for ABC Ltd is

    it sells 42500 units at Rs.120 each, and its break-even point is 25% of sales with PV ratio of 20%?
    A 510,000 Correct Answer Incorrect Answer
    B 127,500 Correct Answer Incorrect Answer
    C 408,000 Correct Answer Incorrect Answer
    D 255,000 Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    Sales in amount = 42500*120 = 51,00,000 BE sales = 25% of sales = 25% of 51,00,000 = 12,75,000 BE sales = Fixed assets/PV Ratio Or Fixed Assets = BE sales * PV ratio                         = 12,75000 *20%                         =2,55,000  

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