New Click here to enroll in UIICL SO Finance and Investment Course

    Register

    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.

    A 2222 Units Correct Answer Incorrect Answer
    B 2500 Units Correct Answer Incorrect Answer
    C 8889 Units Correct Answer Incorrect Answer
    D 3500 Units Correct Answer Incorrect Answer
    E 6667 Units Correct Answer Incorrect Answer

    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  

    Practice Next