Variable cost ratio is 30% fixed cost is Rs. 1,26,000 then the break even point will be
A. Rs. 1,80,000
B. Rs. 1,42,200
C. Rs. 1,63,800
D. Rs. 37,800
Answer: Option A
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Formula of finding Break Even Point (BVP) is:
BVP = Fixed Cost divided by Sale price ratio - Variable Cost ratio
So, we know about that: Sale always equal to 100%.
Then, = 126,000 / 100% - 30%
= 126,000 / 0.70
= 1,80,000
So, the answer A is right.