📢 Too many exams? Don’t know which one suits you best? Book Your Free Expert 👉 call Now!

    Question

    What would be the break even units if the Fixed Cost is

    Rs.1,00,000 and PV ratio is 25%. The company sells its product at Rs.60 per unit.
    A 2222 Units Correct Answer Incorrect Answer
    B 2500 Units Correct Answer Incorrect Answer
    C 8889 Units Correct Answer Incorrect Answer
    D 3500 Units Correct Answer Incorrect Answer
    E 6667 Units Correct Answer Incorrect Answer

    Solution

    BEP in Units = Fixed Cost / Contribution per unit 1,00,000/15 =6666.66 (6667 Units approx.) 4,00,000 / 60= 6667 Contribution per unit = SPPU * PV ratio = 60 Rs * 25% = 15 Rs   Alternatively,   Calculated BEP in Value: FC/ PV ratio 1,00,000 / 25%= 4 lakhs sales   Now divide the BEP sales value by selling price per unit to arrive at BEP in units. 4,00,000/60 = 6666.66  

    Practice Next
    More Financial Management Questions
    ask-question