A company which has a margin of safety of ₹4,00,000 makes a profit of ₹1,00,000. If its fixed cost is ₹5,00,000, then break-even sales is —
CS Executive · Cost and Management Accounting · PYQS · December 2014
A company which has a margin of safety of ₹4,00,000 makes a profit of ₹1,00,000. If its fixed cost is ₹5,00,000, then break-even sales is —
Answer & Explanation:
Correct Answer: Option (A)
Correct answer: (A) ₹20 lakh. P/V ratio = 1,00,000/4,00,000 = 25%; break-even sales = 5,00,000/25% = 20 lakh.
Topics: Marginal Costing
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