Question

Bhati & Sons has sales of Rs.3,00,000,with variable expenses of Rs.2,25,000 and fixed expenses of Rs.50,000 during the year 2013-14. If the company wants to earn a profit of Rs.1,00,000 during 2014-15, it's sales must be ________________.

• A. Rs.6,00,000
• B. Rs. 8,00,000
• C. Rs. 3,00,000
• D. Rs.4,00,000

Answer 1

The correct option is A Rs.6,00,000

Profit =$(S\times P/VRatio)-F.Cost$
Rs.1,00,000 = $(S\times 25$
Rs.1,00,000 + 50,000 = $S\times \frac{25}{100}$
Rs. 1,50,000 = $\frac{Sales}{4}$
Sales = Rs. 6,00,000
P/V Ratio = $\frac{C}{S}\times 100$ OR $\frac{S-V}{S}\times 100$
=$\frac{Rs.3,00,000-2,25,000}{Rs.3,00,000}\times 100$
=$\frac{Rs.75,000}{Rs.3,00,000}\times 100$
=25%.