Given sales = 100000, Profit = 10000 , variable cost = 70%.The sales required to earn a profit of Rs.40000 is ………………………

Question

Quizplus · Accepted Answer

To find the sales required to earn a profit of Rs. 40000, we use the formula: Sales = (Fixed Costs + Desired Profit) / Contribution Margin Ratio. Here, Contribution Margin Ratio = 1 - Variable Cost Ratio = 1 - 0.7 = 0.3. Fixed Costs can be calculated from the given profit and sales: Fixed Costs = Sales - (Variable Costs + Profit) = 100000 - (0.7 * 100000 + 10000) = 20000. Thus, Sales = (20000 + 40000) / 0.3 = 200000.

Given Sales = 100000, Profit = 10000 , Variable Cost