Exercise 1

Production Budget
Particular Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total
Sales Demand 24,000 25,000 20,000 26,000 95,000
Opening Stock 2,500 2,900 900 3,300 2,500
60% of current quarter demand 14400 15000 12000 15600 57000
40% of following quarter demand 10000 8000 10400 8,900 37,300
Total Production 24400 23000 22400 24,500 94,300
Closing stock 2,900 900 3,300 1800 1800

Break Even Point = Fixed Cost

P/V Ratio
PV ratio = S-V*100
S

PV ratio = $30-$20
$30
=33.33%

Break Even Point($) $50,000

33.33%
=$150,015

Break Even Point (in units) = $150,015

30
=5001 Units