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Break even point:
EM Electricals, Inc., contains fixed costs of Rs. 600,000 this period. Variable costs involved labour charges of Rs.100 per unit and material cost of Rs. 200 per unit. Selling cost of the product is Rs. 500 per unit. The break even point in Rs. is determined as follows:
BEPR = F / (1 - V / P)
Strategic Planning in = 600, 000/ (1 - [200 + 100]/ 500) = 600, 000/0.4
= Rs. 1,500,000
and the break even point in units is
BEPx = F/(P - V )
= 600, 000 / (500 - (200 + 100))
= 3000 units.
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