Following is the financial data:
Sales = 240000
Variable expenses = 192000
Contribution = 48000
Fixed expenses = 32000
Profit = 16000

Find out:
(i) Profit ratio
(ii) Break-Even Point (BEP)
(iii) Profit if the sales are Rs. 180000.

Let's solve the problem step-by-step.
First, let's understand the components given in the financial data:

Sales : Rs. 240,000
Variable Expenses : Rs. 192,000
Contribution Margin : Rs. 48,000
Fixed Expenses : Rs. 32,000
Profit : Rs. 16,000

Now, let’s proceed with the calculations:
(i) Profit Ratio
Profit ratio is a measure of the profitability of a business. It's calculated by dividing the profit by the sales and is usually expressed as a percentage.
Profit Ratio = Sales Profit ​ × 100
Substituting the given values:
Profit Ratio = 240 , 000 16 , 000 ​ × 100 = 6.67%
(ii) Break-Even Point (BEP)
The break-even point is the level of sales at which total revenues equal total expenses, resulting in zero profit. It can be computed using the formula:
BEP (in Rs.) = Contribution Margin Ratio Fixed Expenses ​
First, calculate the Contribution Margin Ratio:
Contribution Margin Ratio = Sales Contribution Margin ​ = 240 , 000 48 , 000 ​ = 0.2
Now, calculate the BEP:
BEP = 0.2 32 , 000 ​ = 160 , 000
So, the BEP is Rs. 160,000.
(iii) Profit if the sales are Rs. 180,000
To find the new profit at Rs. 180,000 sales, first calculate the new contribution:
Contribution at Rs. 180,000 sales = Sales × Contribution Margin Ratio
= 180 , 000 × 0.2 = 36 , 000
Profit = Contribution - Fixed Expenses
= 36 , 000 − 32 , 000 = 4 , 000
So, the profit would be Rs. 4,000 if the sales are Rs. 180,000.

Answered by LiamAlexanderSmith | 2025-07-22