When fixed cost is Rs. 10,000 and the profit volume ratio is 20% then break even point will be
A. Rs. 2,000
B. Rs. 5,000
C. Rs. 50,000
D. Rs. 10,000
Answer: Option C
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The break-even point can be calculated using the formula:
Break-even point = Fixed costs / Profit volume ratio
Given that the fixed cost is Rs. 10,000 and the profit volume ratio is 20%, we can substitute these values into the formula:
Break-even point = 10,000 / 0.20
Break-even point = 50,000
Therefore, the break-even point is Rs. 50,000.
So, the correct answer is C. Rs. 50,000.