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  • Management Accounting: Break-Even Analysis

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    Varun Narayanan
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    A group of 6 students submitted a break-even analysis of the Smoking Joe's restaurant in Viman Nagar. They collected monthly sales of Rs. 12 lakh with fixed expenses of Rs. 4.2 lakh (35% of sales) and variable expenses of Rs. 3.6 lakh (30% of sales). They calculated a profit volume ratio of 25%, meaning the company earns Rs. 25 for every Rs. 100 of sales. Using this, they determined the break-even point is Rs. 16.8 lakh in sales.

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    Management Accounting

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    A group of 6 students submitted a break-even analysis of the Smoking Joe's restaurant in Viman Nagar. They collected monthly sales of Rs. 12 lakh with fixed expenses of Rs. 4.2 lakh (35% of sales) and variable expenses of Rs. 3.6 lakh (30% of sales). They calculated a profit volume ratio of 25%, meaning the company earns Rs. 25 for every Rs. 100 of sales. Using this, they determined the break-even point is Rs. 16.8 lakh in sales.

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    9 views2 pages

    Management Accounting: Break-Even Analysis

    Uploaded by

    Varun Narayanan
    A group of 6 students submitted a break-even analysis of the Smoking Joe's restaurant in Viman Nagar. They collected monthly sales of Rs. 12 lakh with fixed expenses of Rs. 4.2 lakh (35% of sales) and variable expenses of Rs. 3.6 lakh (30% of sales). They calculated a profit volume ratio of 25%, meaning the company earns Rs. 25 for every Rs. 100 of sales. Using this, they determined the break-even point is Rs. 16.8 lakh in sales.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    of 2

    Date of Submission : 24/01/13

    Management
    Accounting
    Break-even Analysis

    Submitted By :Varun Narayanan - 1105


    Kaushik Agarwal - 1109
    Vanya Binani - 1104
    Yashvardhan Singh - 1107
    Vedika Chitnis - 1106
    Neerav Jhamthani -1108

    Submitted To :Prof. Archana

    The company we visited was Smoking Joe's, Viman Nagar branch. We collected
    the following information in order to find the break-even point of the company.
    Total Sales per month(Average) = Rs. 12,00,000
    Fixed Expenses = Rs. 4,20,000 (35% of sales)
    which is obtained as, 35/100 12,00,000
    Variable Expenses = Rs. 3,60,000
    which is obtained as, 30/100 12,00,000

    Using the above information, we calculate Profit Volume Ratio, which as


    follows :PV Ratio = Profit/Sales 100
    = 3,00,000/12,00,000 100
    = 25%

    From this we can imply that the company earns Rs. 25 on every Rs. 100 of sale.
    From the PV ratio we can calculate the break-even Point, which as follows :Break - Even Point = Fixed Expenses/PV Ratio
    = 4,20,000/25
    = 16,800

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