Question

In: Accounting

Break-Even Point

 

S.S Corporation had sales of Rs. 4,500,000. The fixed expense was Rs. 1,200,000 and variable expense totaled Rs. 1,800,000. You are required to calculate Break-Even Point for S.S Corporation.

Solutions

Expert Solution

Break even point = fixed cost/contribution margin ratio  
     
contribution margin = contribution/sales  
=(4,500,000-1,800,000)/4,500,000

=0.6*100%

= 60%

  
     
break even point = 1,200,000/60%  
  = 2,000,000  

Break even point refers to the amount of revenue necessary to cover the total fixed and variable expenses incurred by a company within a specified time period.

it is calculated as Break even point= Fixed cost/Contribution margin ratio

It is mostly the point where the lossesof a company end and its profits start accumulating.

the break-even point for S.S corporation = $2,000,000

veronica makokha answered 3 years ago
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