Sales Rs. 50,000; Variable cost Rs. 30,000; Net profit Rs. 6,000; fixed cost is .a.b. Rs. l4,000 .b.Rs. 10,000.c.Rs. 12,000.d.Rs. 8,000.
Question
Sales Rs. 50,000; Variable cost Rs. 30,000; Net profit Rs. 6,000; fixed cost is .a.b. Rs. l4,000 .b.Rs. 10,000.c.Rs. 12,000.d.Rs. 8,000.
Solution
To find the fixed cost, we need to rearrange the profit equation. The profit equation is:
Profit = Total Sales - Total Cost Total Cost = Variable Cost + Fixed Cost
Given in the problem, we have:
Sales (Total Revenue) = Rs. 50,000 Variable Cost = Rs. 30,000 Net Profit = Rs. 6,000
We can substitute Sales and Variable Cost into the Total Cost equation:
Total Cost = Sales - Profit Total Cost = Rs. 50,000 - Rs. 6,000 Total Cost = Rs. 44,000
Then we substitute Total Cost and Variable Cost into the Fixed Cost equation:
Fixed Cost = Total Cost - Variable Cost Fixed Cost = Rs. 44,000 - Rs. 30,000 Fixed Cost = Rs. 14,000
So, the fixed cost is Rs. 14,000, which corresponds to option a.
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