Question
The PV ratio is 80% and MOS is Rs.40,000. Calculate
Fixed cost if Selling Price (SP) per unit is Rs.5 and Contribution is Rs.80,000.Solution
Contribution/ PV ratio = Sales = 1,00,000 and Break Even sales = Sales â MOS =1,00,000 â 40,000 = 60,000 Break even units = break even sales/SP = 60,000/5 = 12,000 units Now, Variable Cost per unit = 5*(1-80%) = 1, therefore, contribution per unit = 4 Fixed Cost = Contribution*BE units = Rs.4 * 12,000 = Rs.48,000
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