Two businesses, P Ltd. and Q Ltd. sell the same type of product in the same type of market. Their budgeted profit and loss accounts for the coming year are as under: P Ltd. (Rs.)Q. Ltd. (Rs.)Sales150000150000Variable Cost120000100000Fixed cost1500035000Budgeted Net profit1500015000 You are required to:Calculate the break-even point for each businessCalculate the sales volume at which each business will earn Rs.5,000 Profit.State which business is likely to earn greater profit in conditions of:Heavy demand for the productLow de

Break-even is a point at which the business neither earns profits nor incurs losses.

Answered: Two businesses, P Ltd. and Q Ltd. sell…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Two businesses, P Ltd. and Q Ltd. sell the same type of product in the same type of market. Their budgeted profit and loss accounts for the coming year are as under:

	P Ltd. (Rs.)	Q. Ltd. (Rs.)
Sales	150000	150000
Variable Cost	120000	100000
Fixed cost	15000	35000
Budgeted Net profit	15000	15000

You are required to:

Calculate the break-even point for each business
Calculate the sales volume at which each business will earn Rs.5,000 Profit.
State which business is likely to earn greater profit in conditions of:
Heavy demand for the product

Low de

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