(Solved by Humans)-Problem 5 The sales of rubber industries in the first half of 2003 amounted to Rs. 2,70,000 and the.

Paper Details

Problem 5 The sales of rubber industries in the first half of 2003 amounted to Rs. 2,70,000 and the profit earned was Rs. 7,200. The sales in the second half of 2003 amounted to Rs. 3,42,000 and profit earned was Rs. 20,700 for that half year. Assuming no change in fixed cost, calculate the following: 1. The amount of profit when sales is Rs. 2,16,000 2. The amount of sales required to earn a profit of Rs. 36,000 Solution Calculation of P/V Ratio P/V Ratio = Change in Profit Change in Sales Change in Profit = 20,700 – 7,200 = Rs. 13,500 Change in Sales = 342,000 – 270,000 = Rs. 72,000 P/V Ratio = 18.75% Calculation of Fixed Expenses (Second half) Fixed Cost = P/V Ratio of Sales – Profit = 18.75% of 3,42,000 – 20,700 = Rs. 43,425 (First half) Fixed Cost @18.75% of 2,70,000 - 7200 = Rs. 43,425 Calculation of Profit when Sales is at Rs. 2,16,000 P/V Ratio x 2,16,000 - Fixed Cost = 18.75% of 2,16,000 - 43,425 = Rs. 40,500 Sales to earn a Profit of Rs. 36,000 = Fixed Cost + Desired Profit P/V Ratio = 43,425 + 36,000 or Rs. 423,600 18.75%