Plz solve this problem

1)  80,000 / 40% = 2,00,000/- sales volume to achieve break even point.

assumptions: no tax,,, p.v ratio = contribution / sales i.ee 40/100*100 = 40/-,,assumed as 100% sales volume.

2) 80,000 + 30,000 = 1,10,000 / 40% = 2,75,000/- sales volume to achieve break even point.

  note: 2,00,000 * 15/100 = 30,000/- is opportunity cost is to considered to achieve break even point.

3) it is up to uuuu,,, to think what to do??????????

 

Break Even Point = Fixed Cost/ Contribution ratio 

                                = 80000/40% = Rs. 200,000/-

BEP (with targetted profit) = Targetted Profit = 200000 * 15% = 30000

Therefore, BEP = (Fixed Cost + Targetted Profit)/ Contribution Ratio

                             =  (80000+30000)/40% = Rs. 275000/-

Now, 3rd part involves a decision on Shut Down of business. So we have 2 alternatives :

Particulars                                             Shut Down                                  Continue Business

Fixed Cost                                              Nil                                                  80000

Shut Down Expenses                          25000                                            Nil

 Difference in 2 expenditure = 80000 - 25000 = Rs. 55,000/-

Now in order to Shut Down his business, sales level should be such that Contribution is less than Rs. 55,000/-

Sales Level to acheive Rs 55,000 contribution = 55,000/40% = 137500/-

Therefore, shut down would be feasible at Sales Level of less than  Rs. 137500 

@ vineet jaiswal 

let  we give her, an opportunity to think & make a good decission. & 

y u provided that decission making answer.

Originally posted by : gvgr7
	@ vineet jaiswal  let  we give her, an opportunity to think & make a good decission. &  y u provided that decission making answer.

Sorry for the mistake.