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CMA Intermediate · Management Accounting · Applications of Marginal Costing in Short Term Decision Making

Meera Industries makes two products. Product P: sales ₹40 per unit, variable cost ₹25, sells 6,000 units. Product Q: sales ₹60 per unit, variable cost ₹36, sells 4,000 units. Fixed costs are ₹1,20,000. Selling in this fixed mix, what is the break-even sales value (to the nearest rupee)?

Break-even sales are about ₹3,09,677 on the given data, but this does not match the options.

  1. A₹3,60,000
  2. B₹4,00,000Correct
  3. C₹3,33,333
  4. D₹4,80,000

Explanation

Sales: P 2,40,000 + Q 2,40,000 = 4,80,000. Contribution: P 6,000 x 15 = 90,000; Q 4,000 x 24 = 96,000; total 1,86,000. Composite P/V = 1,86,000/4,80,000 = 38.75%. BEP = 1,20,000/0.3875 = ₹3,09,677. That value is not listed, so recheck: Q contribution is 4,000 x 24 = 96,000 and P is 90,000, giving 1,86,000; BEP = ₹3,09,677.

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