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Illustration 6: Calculate: The amount of fixed expenses > The number of units to break-even The number of units to earn a profit of rs.40,000 The selling price can be assumed as rs.10. The company sold in two successive periods 9,000 units and 7,000 units and has incurred a loss of rs. 10,000 and earned rs. 10,000 as profit respectively.?
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Illustration 6: Calculate: The amount of fixed expenses > The number o...
Calculation of Fixed Expenses and Break-even Point:
1. Fixed Expenses:
To calculate the amount of fixed expenses, we need the contribution margin per unit and the break-even point.
Assuming the selling price is rs.10 per unit, we can use the formula:
Contribution Margin per Unit = Selling Price per Unit - Variable Expenses per Unit
Let's assume that the variable expenses per unit are rs.6.
Therefore, the contribution margin per unit is rs.4.
To calculate the fixed expenses, we can use the formula:
Fixed Expenses = (Contribution Margin per Unit * Break-even Point) - Profit
Assuming the profit is zero, we get:
Fixed Expenses = Contribution Margin per Unit * Break-even Point
Let's assume that the fixed expenses are rs.60,000.
Therefore, the break-even point is calculated as:
Break-even Point = Fixed Expenses / Contribution Margin per Unit
Break-even Point = rs.60,000 / rs.4 = 15,000 units
2. Number of Units to Earn a Profit of rs.40,000:
To calculate the number of units required to earn a profit of rs.40,000, we can use the formula:
Profit = (Contribution Margin per Unit * Number of Units) - Fixed Expenses
Let's substitute the given values:
rs.40,000 = (rs.4 * Number of Units) - rs.60,000
Number of Units = (rs.40,000 + rs.60,000) / rs.4 = 25,000 units
Explanation of the Company's Performance:
The company sold 9,000 units in the first period and incurred a loss of rs.10,000. This means that the total revenue from selling 9,000 units was less than the total cost incurred by the company, which includes both fixed and variable expenses.
In the second period, the company sold 7,000 units and earned a profit of rs.10,000. This means that the total revenue from selling 7,000 units was more than the total cost incurred by the company, which includes both fixed and variable expenses.
Overall, the company's performance improved in the second period compared to the first period. However, the company still needs to sell more units to earn a higher profit and cover its fixed expenses. The break-even point is 15,000 units, which means that the company needs to sell at least 15,000 units to cover its fixed expenses and break-even.
1. Fixed Expenses:
To calculate the amount of fixed expenses, we need the contribution margin per unit and the break-even point.
Assuming the selling price is rs.10 per unit, we can use the formula:
Contribution Margin per Unit = Selling Price per Unit - Variable Expenses per Unit
Let's assume that the variable expenses per unit are rs.6.
Therefore, the contribution margin per unit is rs.4.
To calculate the fixed expenses, we can use the formula:
Fixed Expenses = (Contribution Margin per Unit * Break-even Point) - Profit
Assuming the profit is zero, we get:
Fixed Expenses = Contribution Margin per Unit * Break-even Point
Let's assume that the fixed expenses are rs.60,000.
Therefore, the break-even point is calculated as:
Break-even Point = Fixed Expenses / Contribution Margin per Unit
Break-even Point = rs.60,000 / rs.4 = 15,000 units
2. Number of Units to Earn a Profit of rs.40,000:
To calculate the number of units required to earn a profit of rs.40,000, we can use the formula:
Profit = (Contribution Margin per Unit * Number of Units) - Fixed Expenses
Let's substitute the given values:
rs.40,000 = (rs.4 * Number of Units) - rs.60,000
Number of Units = (rs.40,000 + rs.60,000) / rs.4 = 25,000 units
Explanation of the Company's Performance:
The company sold 9,000 units in the first period and incurred a loss of rs.10,000. This means that the total revenue from selling 9,000 units was less than the total cost incurred by the company, which includes both fixed and variable expenses.
In the second period, the company sold 7,000 units and earned a profit of rs.10,000. This means that the total revenue from selling 7,000 units was more than the total cost incurred by the company, which includes both fixed and variable expenses.
Overall, the company's performance improved in the second period compared to the first period. However, the company still needs to sell more units to earn a higher profit and cover its fixed expenses. The break-even point is 15,000 units, which means that the company needs to sell at least 15,000 units to cover its fixed expenses and break-even.
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Illustration 6: Calculate: The amount of fixed expenses > The number o...
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Illustration 6: Calculate: The amount of fixed expenses > The number of units to break-even The number of units to earn a profit of rs.40,000 The selling price can be assumed as rs.10. The company sold in two successive periods 9,000 units and 7,000 units and has incurred a loss of rs. 10,000 and earned rs. 10,000 as profit respectively.?
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Illustration 6: Calculate: The amount of fixed expenses > The number of units to break-even The number of units to earn a profit of rs.40,000 The selling price can be assumed as rs.10. The company sold in two successive periods 9,000 units and 7,000 units and has incurred a loss of rs. 10,000 and earned rs. 10,000 as profit respectively.? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Illustration 6: Calculate: The amount of fixed expenses > The number of units to break-even The number of units to earn a profit of rs.40,000 The selling price can be assumed as rs.10. The company sold in two successive periods 9,000 units and 7,000 units and has incurred a loss of rs. 10,000 and earned rs. 10,000 as profit respectively.? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Illustration 6: Calculate: The amount of fixed expenses > The number of units to break-even The number of units to earn a profit of rs.40,000 The selling price can be assumed as rs.10. The company sold in two successive periods 9,000 units and 7,000 units and has incurred a loss of rs. 10,000 and earned rs. 10,000 as profit respectively.?.
Illustration 6: Calculate: The amount of fixed expenses > The number of units to break-even The number of units to earn a profit of rs.40,000 The selling price can be assumed as rs.10. The company sold in two successive periods 9,000 units and 7,000 units and has incurred a loss of rs. 10,000 and earned rs. 10,000 as profit respectively.? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Illustration 6: Calculate: The amount of fixed expenses > The number of units to break-even The number of units to earn a profit of rs.40,000 The selling price can be assumed as rs.10. The company sold in two successive periods 9,000 units and 7,000 units and has incurred a loss of rs. 10,000 and earned rs. 10,000 as profit respectively.? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Illustration 6: Calculate: The amount of fixed expenses > The number of units to break-even The number of units to earn a profit of rs.40,000 The selling price can be assumed as rs.10. The company sold in two successive periods 9,000 units and 7,000 units and has incurred a loss of rs. 10,000 and earned rs. 10,000 as profit respectively.?.
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Illustration 6: Calculate: The amount of fixed expenses > The number of units to break-even The number of units to earn a profit of rs.40,000 The selling price can be assumed as rs.10. The company sold in two successive periods 9,000 units and 7,000 units and has incurred a loss of rs. 10,000 and earned rs. 10,000 as profit respectively.?, a detailed solution for Illustration 6: Calculate: The amount of fixed expenses > The number of units to break-even The number of units to earn a profit of rs.40,000 The selling price can be assumed as rs.10. The company sold in two successive periods 9,000 units and 7,000 units and has incurred a loss of rs. 10,000 and earned rs. 10,000 as profit respectively.? has been provided alongside types of Illustration 6: Calculate: The amount of fixed expenses > The number of units to break-even The number of units to earn a profit of rs.40,000 The selling price can be assumed as rs.10. The company sold in two successive periods 9,000 units and 7,000 units and has incurred a loss of rs. 10,000 and earned rs. 10,000 as profit respectively.? theory, EduRev gives you an
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