Discussion
You are given the following information :
Selling price per unit : Rs. 40
Variable cost per unit : Rs. 30
Fixed cost Rs. 1,80,000
What will be the new Break even sales in rupees if sales price is reduced by 10% ?
Answer: A
The new break-even sales are Rs. 10,80,000.
\[ \begin{aligned} \text{New price} &= 40 - 10\% = \text{Rs. } 36 \\ \text{Contribution} &= 36 - 30 = \text{Rs. } 6 \\ \text{BEP (units)} &= \frac{1,80,000}{6} = 30,000 \end{aligned} \]
\[ \text{BEP (Rs.)} = 30,000 \times 36 = \text{Rs. } 10,80,000 \]
At the original price the contribution was Rs. 10 and break-even sales Rs. 7,20,000 (18,000 units at Rs. 40). The 10% price cut reduces contribution per unit by 40%, which is why break-even sales rise so sharply.
Post your comment
Please log in or register to post a comment.
Examination Categories
- SSC Exams
- Banking Exams
- Teaching Exams
- Civil Services Exams
- Railways Exams
- Engineering Recruitment Exams
- Defence Exams
- State Government Exams
- Police Exams
- Insurance Exams
- Nursing Exams
- Other Government Exams
- NRA CET
- PG Entrance Exams
- Campus Placement
- MBA Entrance Exams
- CUET and UG Entrance
- Judiciary Exams
- Regulatory Body Exams
- Software Development