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%?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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