Cost Volume Profit Analysis

[irfan kazim]

Some times question is given in aggregate values. like sale, variable cost and fixed cost is given in aggregate value. In this situation, we have to find contribution/sale ratio. divide contribution by total sale which is given. To find BEP in valuea or sale or rupees, divide total fixed cost by contribution/sale ratio discussed above. To check this either or answer is correct or not, find variable/sale ratio likewise contribution/sale ratio. Suppose BEP in rupees is 120000 and varible/sale ratio is 60%. deduct 60% from 120000 and minus fixed cost from contribution, the anwer is zero. your
For example, sale is 300000, varible cost is 150000 and fixed cost is 80000. find bep in rupees.
working" sale-variable cost = contribution
300000-150000 =150000
C/s ratio= 150000/300000=50%
BEP = fixed cost/ c/s ratio
80000/50% =160000
checking"
BEP= 160000
Variable cost. -80000
v/sale ratio
150000/300000
50%
----------
80000
fixed cost -80000
------------
0