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      Question

      An owner of a business has invested Rs 10,00,000 in

      business. He wants a 15% ROI on his money. From an analysis of recent cost figures, he finds that his variable cost of operating is 50% of sales; his fixed costs are ₹ 250,000 per year. You need to calculate the sales volume that must be obtained to break even?
      A 250000 Correct Answer Incorrect Answer
      B 400000 Correct Answer Incorrect Answer
      C 450000 Correct Answer Incorrect Answer
      D 500000 Correct Answer Incorrect Answer
      E 800000 Correct Answer Incorrect Answer

      Solution

      Variable Cost Ratio = 50% P/V Ratio = 1 – Variable Cost Ratio = 1 – 50% = 50% (a) Break Even Point (in ₹) = Fixed Cost / PV Ratio = 250,000 / 50% = 500000

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