The correct answer is: B. Rs 18,00,000
The break-even point is the point at which a company’s revenue is equal to its costs. In other words, it is the point at which the company neither makes nor loses money.
The break-even point can be calculated using the following formula:
Break-even point = Fixed costs / Contribution margin
The contribution margin is the amount of revenue that is left over after a company has covered its variable costs. In other words, it is the amount of revenue that is available to cover fixed costs and make a profit.
The P/v ratio is the ratio of a company’s selling price to its variable cost per unit. The margin of safety is the percentage of sales that a company can lose before it reaches its break-even point.
In this case, the P/v ratio is 50% and the margin of safety is 40%. This means that the company’s contribution margin is 60% of its sales.
The fixed costs are not given in the question, but we can calculate them using the following formula:
Fixed costs = Break-even point * Contribution margin
Substituting the values we know into the formula, we get:
Fixed costs = 18,00,000 * 60/100 = Rs 10,800,000
Therefore, the break-even point for the company is Rs 18,00,000.
Option A is incorrect because it is the contribution margin, not the break-even point.
Option C is incorrect because it is the fixed costs, not the break-even point.
Option D is incorrect because it is not one of the possible answers.