Question

Baekdu Company currently has 90 million won in sales and 2.4 million won in net profit after tax. The umbrellas produced by the company are sold for 2,000 won per unit, and the variable cost is 1,500 won per umbrella. The corporate tax rate is 40%.

1. What is the fixed cost of this company?

2. Find the break-even point of this company by sales and sales, respectively.

Answer 1

	Baekdu Company
	Partculars	Amt Won
	Net Profit After Tax	2,400,000
	Tax Rate =	40%
	Profit Before Tax=2400000/(1-40%)=	4,000,000
	Contribution Margin Calculation
	Sales Price per unit	2,000
	Variable cost per unit	1,500
	Variable cost as % of Sales Price =	75.00%
	Contribution Margin per unit=	500
	Contribution Margin %	25%
	Sales =	90,000,000
	Variable cost @75% =	67,500,000
a	Gross Profit =Contribution Margin=	22,500,000
b	Profit Before Tax =	4,000,000
c	So Fixed cost =a-b=	18,500,000	Ans a.
d	Contribution Margin per unit=	500
e	BEP in units of sales =c/d=	37,000	Units (ans b)
f	Contribution Margin %	25%
g	BEP Sales Won=c/f=	74,000,000	Ans b.