What do you understand by Break-even-point in production planning? How do you calculate the break even-point (indicate two approaches of finding this)?
What is the practical significance of this analysis?
Following data relate to a manufacturing organization:
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Annual sales (8000 units @ Rs. 10 per unit)
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Rs.80,000
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Variable expenses
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Rs.64,000
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Contribution
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Rs.16,000
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Fixed expenses
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Rs.24,000
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Losses
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Rs.(8,000)
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- What sales are needed to break-even?
- What sales are necessary to result in a net income of Rs. 9,000, the corporate tax rate being 55%?
- What should be the selling price per unit, if the break-even-point is to be brought down to 10,000 units? .