A company has fixed costs of Rs. 90,000 and a contribution margin ratio of 30 percent. What sales revenue is required to break even?
Correct answer: B. Rs. 300,000
- A. Rs. 270,000
- B. Rs. 300,000
- C. Rs. 360,000
- D. Rs. 450,000
Explanation
Break-even sales revenue equals fixed costs divided by the contribution margin ratio. Rs. 90,000 divided by 0.30 equals Rs. 300,000, so the other figures use incorrect ratios.
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Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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