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KR Corporation's break-even point in sales is Rs. 900,000, and its variable expenses are 75% of sales

KR Corporation's break-even point in sales is Rs. 900,000, and its variable expenses are 75% of sales. If the company lost Rs. 32,000 last year, sales must have amounted to

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Expert Solution

Contribution margin ratio = 1 - variable expense ratio

= 1 - 0.75

= 0.25

Break-even-point in sales  = Fixed expenses / Contribution margin ratio 

Rs. 900,000 = Fixed expenses / 0.25

Fixed expenses = $225,000

Profit = (Sales x Contribution margin ratio ) - Fixed expenses

- $32,000 = (Sales x 0.25) - $225,000

(Sales x 0.25) = -$32,000 + $225,000

 

Sales = $772,000

Contribution margin ratio = 1 - variable expense ratio

Break-even-point in sales  = Fixed expenses / Contribution margin ratio 

DEEPIKA GOYAL answered 2 years ago
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