Question
What would be the break even units if the Fixed Cost is
Rs.1,00,000 and PV ratio is 25%. The company sells its product at Rs.60 per unit.Solution
BEP in Units = Fixed Cost / Contribution per unit 1,00,000/15 =6666.66 (6667 Units approx.) 4,00,000 / 60= 6667 Contribution per unit = SPPU * PV ratio = 60 Rs * 25% = 15 Rs Alternatively, Calculated BEP in Value: FC/ PV ratio 1,00,000 / 25%= 4 lakhs sales Now divide the BEP sales value by selling price per unit to arrive at BEP in units. 4,00,000/60 = 6666.66
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