CA Foundation · Quantitative Aptitude · Equations
A fixed cost of ₹12,000 is incurred by Sharma Traders each month, and the variable cost is ₹20 per unit. Each unit sells for ₹32. How many units must be sold in a month to break even?
The break-even quantity is 1,000 units. At break-even, revenue equals total cost, so 32x = 12,000 + 20x. Each unit contributes ₹12 towards fixed costs, and 12,000 divided by 12 gives 1,000 units.
- A600
- B1,000Correct
- C375
- D1,200
Explanation
Break-even occurs when revenue equals total cost: 32x = 12,000 + 20x, so 12x = 12,000 and x = 1,000. Check: revenue 32,000; cost 12,000 + 20,000 = 32,000. Choosing 600 comes from dividing 12,000 by 20 and ignoring revenue per unit, which is wrong.
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