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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 тВ╣ 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 тАУ Variable Cost Ratio = 1 тАУ 50% = 50% (a) Break Even Point (in тВ╣) = Fixed Cost / PV Ratio = 250,000 / 50% = 500000

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