The ratio of variable cost to sales is 70%. The B.E. Point occurs at 80% capacity. Find 100% capacity sales when fixed cost is ₹ 6,00,000. Assume that P/V Ratio, variable cost ratio are complement each other.
₹ 25,00,000
Variable cost ratio = 70%, so P/V ratio \(= 100\% - 70\% = 30\%\).
Break-even sales \(= \frac{\text{Fixed Cost}}{\text{P/V Ratio}} = \frac{6,00,000}{0.30} = ₹\ 20,00,000\).
Break-even occurs at 80% capacity, so sales at 100% capacity \(= \frac{20,00,000}{0.80} = ₹\ 25,00,000\).
Hence, the sales at 100% capacity are ₹ 25,00,000.
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