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Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Advanced Business and Financial Management — CAIIB.
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What is the formula for Break-Even Point in units?
BEP (units) = Fixed Costs / Contribution per unit. It is the output level at which total revenue equals total cost, resulting in no profit or loss.
What is the Break-Even Point formula when selling price and variable cost are known?
BEP = Fixed Cost divided by Contribution per unit
How is Contribution defined in CVP analysis?
Contribution = Sales Revenue - Variable Costs. It represents the amount available to cover fixed costs and generate profit.
If selling price is ₹950 and variable cost is ₹570, what is the contribution per unit?
Contribution per unit is ₹380
What does the P/V Ratio measure and how is it calculated?
The P/V Ratio (Profit/Volume Ratio) measures the contribution earned per rupee of sales. It is calculated as Contribution / Sales, or equivalently (Sales - Variable Cost) / Sales.
What is the BEP in units if fixed cost is ₹38,00,000 and contribution per unit is ₹380?
BEP is 10,000 units
How is Margin of Safety calculated and what does it indicate?
Margin of Safety = Actual Sales - Break-Even Sales. It shows how much sales can fall before the firm reaches the break-even point.
How does a price reduction affect the Break-Even Quantity in CVP analysis?
Price reduction reduces contribution and increases BEP
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