Homework Answers
| Sales Volume (in Units) | Sale Value (in Rs.) | Profit/ Loss (in Rs.) (Loss is shown as minus) |
| 20000 | 20000 Units * Rs. 15 = 3,00,000 | 20000 units * Rs. 4= 80,000 |
| 8000 | 8000 Units *Rs. 15= 1,20,000 | 8000 units *Rs. 5= -40,000 |
| Change in Value | Rs. 1,80,000 (3,00,000-1,20,000) | Rs. 1,20,000 [80,000-(-40000)] |
| PV Ratio = (Change in Profit / Change in Sales) * 100 | ||
| (1,20,000/1,80,000) *100 = 66.6666% | ||
| According to question | ||
| When 8000 units are sold | ||
| PV Ratio = (Fixed Cost + Profit) / Sales *100 | ||
| 66.6666 = Fixed Cost + (-40,000)/ 120,000 *100 | ( At 8000 units of sale the loss is Rs. 40,000 and Sale value is Rs. 1,20,000) | |
| Fixed Cost -40,000 = (1,20,000*66.6666)/100 | ||
| Fixed Cost - 40,000 = 80,000 | ||
| Fixed Cost = 80,000 + 40,000 | ||
| Fixed Cost = 1,20,000 | ||
| Breakeven point (in Rupees) | ||
| PV Ratio = (Fixed Cost / Breakeven sales) *100 | ||
| 66.6666= (1,20,000 / Breakeven sales) * 100 | ||
| Breakeven sales = Rs. 1,80,000 | ||
| Breakeven point (in units) | ||
| Rs. 1,80,000 / Rs. 15 = 12,000 units | ||
| Alternatively the problem can also be solved using 20000 units as under | ||
| When 20000 units are sold | ||
| PV Ratio = (Fixed Cost + Profit) / Sales *100 | ||
| 66.6666 = Fixed Cost + 80,000/ 3,00,000 *100 | ( At 20000 units of sale the profit is Rs. 80,000 and Sale value is Rs. 3,00,000) | |
| Fixed Cost+80,000= (3,00,000*66.6666)/100 | ||
| Fixed Cost + 80,000 = 2,00,000 | ||
| Fixed Cost = 2,00,000 - 80,000 | ||
| Fixed Cost = 1,20,000 | ||
| Breakeven point (in Rupees) | ||
| PV Ratio = (Fixed Cost / Breakeven sales) *100 | ||
| 66.6666= (1,20,000 / Breakeven sales) * 100 | ||
| Breakeven sales = Rs. 1,80,000 | ||
| Breakeven point (in units) | ||
| Rs. 1,80,000 / Rs. 15 = 12,000 units | ||
| I believe that is have provided a detailed solution for the above problem | ||
| Please do upvote if you found the answer useful. | ||
| Feel free to reach in the comment section in case of any clarification or queries. |
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