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Questions on Break Even Analysis
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This lesson throws light on questions on break even analysis

Harshit Aggarwal
Cleared UPSC ESE twice with Rank 63 and 90 in mechanical engg. Got 99 percentile in GATE. Cracked ONGC, BHEL,ISRO, SAIL, GAIL successfully

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  1. COURSE INDUSTRIAL ENGINEERING LESSON: QUESTIONS ON BREAK EVEN ANALYSIS


  2. ABOUT ME Graduated from NIT Nagpur in 2008 Cleared Engineering Services Examination (ESE-UPSC) Exam & Got the offer letter from most of the Maharatna and Navratna Companies * Cleared GATE Exam Rate, Review, Recommend, Share * Follow me on Unacademy at: https://unacademy.in/user/harshit aggarwal


  3. QUESTION S = 100/unit, v = 60/unit, Fixed Cost = 10,00,000/-. Due to inflation the variable cost increases by 10% while Fixed Cost increases by 5%. If break even quantity is constant, by what percentage should the sales price to be increased. %age chana e log-loo#xlo - 82 lDo


  4. QUESTION Actual Sales = Rs 30,000/- Break Even Sales = Rs 15 Fixed Cost = Rs 6000/- Find Profit at actual SalesVahSeles GE/Sales ,000/ F+P Mos 2) -6 x 100-4DX OR F+P 3o,ooo PRs 6o0s


  5. QUESTION A standard machine tool and an automatic machine tool are being compared for the production of a component. Following data refers to the two machines. Standard Machine Automatic Machine Setup time Machining time per piece Machine rate Tool 30 min 22 min. Rs.200 per hour Tool 2 hours 5 min Rs.800 per hour The breakeven production batch size above which the automatic machine tool will be economical to use, will be (a) 4 (b) 5 (c) 24 (d) 225


  6. SOLUTION Total cost of 21 component by using standard machine tool, 2200 30 22xx200 -100+30 c60 60 Total cost of z2 component by using Automatic Machine tool, 2000 (Te),-1 2 + z2 | x800-1600+ 30 2 Let break even point be z number of components 302 160042000 z= 1500 1500x30 225 2200 TC 100 + (TC) 30 1600 TC) 100 or - 200 Alternately Let N be the Break even number At Break even point 1 22 2 60 1 22 15 60 = 225 22N 20N 1 60 60 22-20 Ans d


  7. QUESTION Two alternative methods can produce a product first method has a fixed cost of Rs. 2000/- and variable cost of Rs. 20/- per piece. The second method has a fixed cost of Rs. 1500/- and a variable cost of Rs. 30/-. The break even quantity between the two alternatives is: (a) 25 (b) 50 (c) 75 (d) 100


  8. SOLUTION 2000 + 20n = 1500 + 30n, 10n = 500 and n = 50. Ans :b


  9. DRAWBACKS OF BREAK EVEN CHART I. Classifying cost as fixed or variable is difficult because of market conditions 2. It is not the tool for short run analysis. It cant inof be used for 8 or 10 year projections The tool cost line, representing variable cost added to fixed cost need not be straight line. Break even chart represents a static picture whereas business operations are far from static. Seles Tet Cos (F 3. Sales Te PROF ST 4. Mangin (BEP 9


  10. THANK YOU