A company has a fixed cost of ₹40,000. Arrange the break even points of the following four cases in the ascending order.
(A) Cost of production of one item is ₹30 and it sells at ₹50
(B) Cost of production of one item is ₹40 and it sells at ₹50
(C) Cost of production of one item is ₹50 and it sells at ₹55
(D) Cost of production of one item is ₹20 and it sells at ₹60
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → (D) < (A) < (B) < (C)
$BEP = \frac{fixex\,cost}{selling\,price\,per\,unit-Cost\,price\,per\,unit}$
(A) $BEP=\frac{40000}{50-30}=\frac{40000}{20}=2000$
(C) $BEP=\frac{40000}{55-50}=8000$
(D) $BEP=\frac{40000}{60-20}=1000$
(B) $BEP=\frac{40000}{50-40}=4000$
$∴(D) < (A) < (B) < (C)$