Mr X has Rs. 2,00,000 as the investment in his business firm. He wants a 15% return on his money. From an analysis of the recent cost figures, he finds that his Variable Cost of operating is 60% of the sales, while his Fixed Costs are Rs. 80,000 per year.
Show the computation to answer the following questions: What sales volume must be obtained to reach the Break-even point (BEP)? What sales volume must be obtained to get a 15% return on the investment? Mr X estimates that even if he closed the doors of his business, he would incur Rs. 25,000 as expenses per year. At what sales would he be better off by locking his business up?