Cost and Management Accounting
Marginal Costing
1. 1. __________ distinguishes absorption costing from
marginal costing.
(a) Product costs include both prime cost
and product ion overhead
(b) Product costs include both production
and non-production costs
(c) Stock valuation includes a share of all
production costs
(d) Stock valuation includes a share of all
costs
2. The Marginal Cost Statement
(a) shows the gross profit
(b) is sent to the shareholders
(c) shows classification of costs as direct and indirect
(d) can be used to predict future profits at different
levels of activity
3. CVP analysis requires costs to be categorized as
(a) fixed or variable
(b) direct or indirect
(c) product or period
(d) standard or actual
4. Contribution equals :
(a) Sales minus cost of sales
(b) Sales minus cost of production
(c) Sales minus variable costs
(d) Sales minus fixed costs
5. Contribution is equal to
(a) Fixed cost + profit
(b) Sales - variable cost
(c) Fixed cost - loss
(d) All the above
6. Which of the following costs is not deducted from sales
revenue in computation of contribution? (a) Direct materials
(b) Direct labour
(c) Fixed factory overheads
(d) Variable selling overheads
7. The selling price per unit less the variable cost per
unit is the :
(a) Fixed cost per unit
(b) Gross profit per unit
(c) Operating profit per unit
(d) Contribution per unit
8. If contribution margin increases by Rs.2 per unit, then
operating profits will
(a) also increase by Rs. 2 per unit
(b) increase by less than Rs. 2 per unit
(c) decrease by Rs. 2 per unit
(d) cannot say
9. P/V ratio is equal to
(a) Profit/volume
(b) Contribution/sales
(c) Profit/contribution
(d) Profit/sales
10. Profit - volume ratio is improved by reducing
(a) Variable cost
(b) Fixed cost
(c) Both of them
(d) None of them
11. At the break-even point
(a) Variable cost - fixed cost = contribution
(b) Sales = variable cost + fixed cost
(c) Sales - fixed cost = contribution
(d) Sales - contribution = variable cost
12. The break-even points in units is equal to
(a) Fixed cost/PV ratio
(b) Fixed cost x sales/total contribution
(c) Fixed cost/contribution per unit
(d) Fixed cost/total contribution
13. When fixed cost increases, the break-even point
(a) Increases
(b) Decreases
(c) No effect
(d) None
14. When variable cost decreases, then break-even point
(a) Increases
(b) Decreases
(c) No effect
(d) None
15. When selling price decreases, then break-even point
(a) Increases
(b) Decreases
(c) No effect
(d) None
16. When sales increases then break-even point
(a) Increases
(b) Decreases
(c) Remains constant
(d) None of these
17. __________ can improve break-even point.
(a) Increase in variable cost
(b) Increase in fixed cost
(c) Increase in sale price
(d) Increase in sales volume
(e) Increase in production volume
18. _________ describes the margin of safety.
(a) actual contribution margin achieved compared with that
required to break-even
(b) actual sales compared with sales required to break-even
(c) actual versus budgeted net profit margin
(d) actual versus budgeted sales
19. Margin of safety is expressed as
(a) Profit / P/V ratio
(b) (Actual sales - sales at BEP) / Actual sales
(c) Actual sales - Sales at BEP
(d) All
20. __________ cases the margin of safety decreases.
(a) Reduction in fixed cost
(b) Increase in variable cost
(c) Increase in the level of production or selling price or
both
(d) Change in the sales mix in order to increase the
contribution
(e) Substitute the existing unprofitable product with the
profitable ones
21. In the break-even chart, the margin of safety point lies
(a) To the left of break even point
(b) To the right of break even point
(c) On break even point
(d) None
22. Fixed cost is equal to
(a) Break-even sales x Margin of safety
(b) Sales x Margin of safety
(c) Sales x Profit-volume ratio
(d) Profit-volume ratio x Break even sales
23. __________ factors is to be multiplied with contribution
margin ratio to calculate profit.
(a) Unit contribution margin
(b) Margin of safety
(c) Variable costs per unit
(d) Unit sales price
24. In cost-volume-profit analysis, profit is equal to
(a) Sales Revenue x P/V ratio - Fixed Cost
(b) Sales units x contribution per unit - fixed costs
(c) Total contribution - Fixed cost
(d) All the above
25. The sales volume in value required to earn the target
profit, the formula is
(a) Target profit / Contribution per unit
(b) (Fixed cost + Target profit) x P/V ratio
(c) (Fixed cost + Target profit) / Contribution on per unit
(d) (Fixed cost + Target profit) / PV ratio
26. There is a reduction in the selling price. This will,
other factors remaining same –
(a) increase contribution margin
(b) reduce fixed costs
(c) increase variable costs
(d) reduce operating income
27. There is an increase in advertising expenses. This will,
other factors remaining same –
(a) reduce operating income
(b) reduce contribution
(c) decrease selling price
(d) increase variable costs
28. Cost-volume-profit analysis is used PRIMARILY by
management :
(a) as a planning tool
(b) for control purposes
(c) to prepare external financial statements
(d) for correct financial results
29. The contribution to sales ratio of a company is 20% and
profit is Rs. 64,500. If the total sales of the company are ` 7,80,000, the
fixed cost is
(a) Rs. 1,56,000
(b) Rs. 1,21,500
(c) Rs. 1,05,600
(d) Rs.91,500
30. The total cost of manufacturing 4,000 units of a product is Rs. 4,50,000 which includes fixed costs of Rs. 2,50,000. If the company desires to produce 5,000 units, then the total cost will be-
(a) Rs. 5,27,778
(b) Rs. 5,20,000
(c) Rs. 5,00,000
(d) Rs. 4,95,000
31. The total cost of manufacturing 3,600 units of Product X is Rs. 81,000 which includes variable cost per unit of Rs. 15.00. If the company desires to produce 3,850 units, then the total cost would be
(a) Rs. 86,625
(b) Rs. 84,750
(c) Rs. 57,750
(d) Rs. 52,250
32. P Limited incurs fixed costs of Rs. 1,00,000 p. a. The company manufactures a single product and sells it for Rs. 50 per unit. If the contribution to sales ratio is 40%, the break-even sales in units are
(a) 5,000
(b) 6,000
(c) 6,500
(d) 7,000
33. A company manufactures a single product with a variable cost per unit of Rs. 22. The contribution to sales ratio is 45%. Monthly fixed costs are Rs. 1,98,000. _________ is the breakeven point in units.
(a) 4,950
(b) 9,000
(c) 11,000
(d) 20,000
34. A Ltd. manufactures and sells product ‘B’. The sale
price per unit of the product is Rs. 35. The company will incur a loss of Rs.5
per unit if it sells 4,000 units; but if the volume is raised to 12,000 units,
the company will make a profit of Rs. 4.50 per unit. The break-even point in
units is
(a) 5,700
(b) 6,612
(c) 5,250
(d) 6,162
35. The profit-volume ratio and margin of safety ratio are
30% and 40% respectively. If the total sales is Rs. 3,00,000, the profit of the
firm is
(a) Rs. 54,000
(b) Rs. 48,000
(c) Rs. 36,000
(d) Rs. 30,000
36. A company manufactures a single product which it sells for Rs. 15 per unit. The product has a contribution to sales ratio of 40%. The company’s weekly break-even point is sales of Rs. 18,000. __________ would be the profit in a week when 1,500 units are sold.
(a) Rs. 900
(b) Rs. 1,800
(c) Rs. 2,700
(d) Rs. 4,500
37. An organisation manufactures a single product. The total
cost of making 4,000 units is Rs. 20,000 and the total cost of making 20,000
units is Rs. 40,000. Within this range of activity the total fixed costs remain
unchanged. __________ is the variable cost per unit of the product.
(a) Rs. 0.80
(b) Rs. 1.20
(c) Rs. 1.25
(d) Rs. 2.00
38. 5,400 units of a company’s single product were sold for
a total revenue of Rs. 1,40,400. Fixed costs in the period were Rs. 39,420 and net profit was Rs. 11,880. __________
was the contribution per unit.
(a) Rs. 7.30
(b) Rs. 9.50
(c) Rs. 16.50
(d) Rs. 18.70
39. Sales are Rs. 3,20,000, fixed costs are Rs. 80,000 and
variable costs are Rs. 1,20,000. __________ is the safety margin.
(a) Rs. 18,900
(b) Rs. 20,000
(c) Rs. 1,92,000
(d) Rs. 1,28,000
(e) Rs. 1,31,000
Formulas
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Fixed cost - : The cost which does not change, with change in
output. Total remains the same. And per unit decreases with the increase in
level of output. |
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Variable cost -: The cost which
changes / varies with the level of output directly. Per unit will remain
same. |
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Contribution = Selling price p.u. -
Variable cost p.u. |
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= Total S.P – Total
variable cost. |
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Profit /
Volume ratio = Contribution * 100 = |
|
Sale |
|
OR |
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Profit / Volume
ratio = Change in Profit * 100 |
|
Change in sale |
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Break even point = It’s a point where
total cost ( variable cost + fixed cost ) = Total revenue. IN other word non
profit but no loss situation. |
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BEP (in
Units) = Fixed cost |
|
Contribution p.u. |
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BEP ( in n
Rs.) = Fixed cost |
|
P/V ratio |
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Margin of safety = Actual sale – BEP sale |
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Profit = Margin of safety * P/V ratio |
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% of margin of safety = M/s * 100 |
|
Actual sale |
1.
From the following data. Calculate the
break-even point.
Selling price per
unit 20
Direct Material
cost per unit 8
Direct labor cost
per unit 2
Direct expenses
per unit 2
Variable
overheads per unit 3
Fixed overheads
(Total) 20,000
If the sales are 20% above break-even point, determine the net profit.
Solution:
|
Particulars |
Amount |
Amount |
|
|
|
Per unit |
|
Sale
p.u. |
|
20 |
|
(-) Variable costs |
|
|
|
Material |
8 |
|
|
Labour |
2 |
|
|
Direct
exp. |
2 |
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|
Variable
OH |
3 |
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Total
Variable cost |
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Contribution |
|
5 |
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P/V ratio = Contribution * 100 = 5 * 100 |
|
25% |
|
Sale 20 |
|
|
|
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|
BEP
in Rs. = Fixed cost = 20,000 = |
|
80,000 |
|
P/V ratio 25% |
|
|
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Margin
of safety = Actual sale – BEP sale |
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i.e
given in question = 20 % of BEP sale |
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= 20
% * 80,000 = 16,000/- |
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Profit = M/s * P/V ratio = 16,000 * 25% = |
|
4,000 |
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Countercheck |
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Sale
20% Above BEP = 80,000 * 120% = |
|
96,000 |
|
(-)
Variable cost ( 75% of sale ) = |
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Contribution
25% of sale |
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(-)
Fixed cost |
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 |
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Profit |
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2.
You are given the following data for the
year 1978 of X Company.
|
Variable costs Fixed costs Net profit |
6,00,000 3,00,000 1,00,000 |
(60%) (30%) (10%) |
|
10,00,000 |
(100%) |
Find out (a) a break-even point (b) the P/V ratio (c) The
margin of safety ratio.
3.
The sales turnover and profit during the two
periods were as follows:
Period no 1 – Sales = Rs.20
lakhs. Profit = Rs.2 lakhs
Period no 2 – Sales = Rs.30
lakhs. Profit = Rs.4 lakhs
Calculate (i) the P/V ratio (ii) the sales required to earn
a profit of Rs.5 lakhs
Solution:
|
|
% |
Amount |
Amount |
|
Sales |
100 |
20,00,000 |
30,00,000 |
|
(-)
Variable cost (bal. fig) |
80 |
-16,00,000 |
24,00,000 |
|
Contribution |
20% |
4,00,000 |
6,00,000 |
|
(-) Fixed cost (Bal. fig) |
|
-2,00,000 |
-2,00,000 |
|
Profit |
|
2,00,000 |
4,00,000 |
|
|
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P/V ratio = Change in profit * 100 |
|
|
|
|
Change in sale |
|
|
|
|
2,00,000 * 100 |
|
|
20% |
|
10,00,000 |
|
|
|
|
|
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Sales to earn profit of Rs. 5,00,000/- |
|
% |
|
|
Sale |
|
100 |
? |
|
(-)
variable cost |
|
80 |
|
|
Contribution |
|
20 |
7,00,000 |
|
(-)
Fixed cost |
|
|
-2,00,000 |
|
Profit |
|
|
5,00,000 |
|
|
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Sale = 7,00,000 * 100 / 20 = |
|
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35,00,000 |
|
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|
To earn profit of Rs. 5,00,000/- sales
should be 35,00,000/- |
|
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OR |
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Profit = M/s * P/V ratio = 5,00,000 |
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M/s * 20% = 5,000,000 |
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M/s = 5,00,000 * 100 / 20 = 25,00,000 |
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BEP = Fixed cost / P/v ratio |
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2,00,000 / 20% = 15,00,000 |
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Actual sale = BEP + M/s |
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25 L + 10L = 35 L |
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4.
Merry Manufacturing Ltd. has supplied you
the following information in respect of one of its products.
|
Particulars |
Rs. |
|
Total fixed costs Total variable costs Total sales Units sold |
18,000 30,000 60,000 20,000 |
Find out the contribution per
unit, the break-even point, the margin of safety, the profit, the volume of
sales of earn a profit of Rs.24,000.
|
Particulars |
Amount |
Amount |
|
|
Sales p.u.( 60,000 /
20,000 unit ) |
|
3 |
|
|
(-) Variable cost (
30,000 / 20,000 units ) |
|
|
|
|
Contribution P.U. |
|
|
1.5 |
|
|
|
|
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|
P/V ratio = Contro
* 100 = |
1.5
* 100 |
|
= 50% |
|
Sale |
3 |
|
|
|
|
|
|
|
|
BEP (In Rs.) = Fixed
cost = |
|
18,000 |
= 36,000 |
|
P/V ratio |
|
50% |
|
|
|
|
|
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|
Margin of safety = Actual sale – BEP |
|
|
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60,000 – 36,000 = |
|
24,000 |
|
|
|
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|
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Profit = M/s * P/V ratio = 24,000 * 50% |
|
12,000 |
|
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Sales to earn profit of Rs. 24,000/- |
|
|
|
|
Contribution (bal. fig) |
|
42,000 |
|
|
(-) Fixed cost |
|
-18,000 |
|
|
Profit |
|
24,000 |
|
|
|
|
|
|
|
|
Sale |
Contribution |
|
|
|
100 |
50 |
|
|
|
? |
42,000 |
|
|
42,000 * 100 / 50 = |
|
84,000 |
|
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In order to earn profit of 24,000/- sales should be Rs. 84,000/- |
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5.
The sales turnover the profit during the two
periods were as follows:
|
Year |
Sales |
Profit |
|
1988 1989 |
1,50,000 1,70,000 |
20,000 25,000 |
You are required to calculate: a) the P/v ratio
b) the
break-even point
c) the
sales required to earn a profit of Rs.40,000.
d) The
profit made when sales are Rs.2,50,000 and
e) The
margin of safety at profit of Rs.50,000.
Solution:
|
Particulars |
Amount |
Amount |
|
|
1988 |
1989 |
|
Sale |
1,50,000 |
1,70,000 |
|
(--)
Variable cost (bal. fig) |
1,12,500 |
1,27,500 |
|
Contribution
25% Wn 1 |
37,500 |
42,500 |
|
(-)
Fixed (Bal. fig) |
-17,500 |
-17,500 |
|
Profit
(Given) |
20,000 |
25,000 |
|
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W.N.
1 |
|
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P/V
ratio = change in profit * 100 |
|
|
|
Change in sale |
|
|
|
5,000 * 100 = 25% |
|
|
|
20,000 |
|
|
|
|
|
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|
BEP
= Fixed cost = 17,500= 70,000 |
|
|
|
P/V ratio 25% |
|
|
|
|
|
|
|
Sales required to earn a profit of 40,000 |
|
|
|
Contribution
(Bal. fig) |
57,500 |
|
|
(-)
Fixed cost |
-17,500 |
|
|
Profit
(Given) |
40,000 |
|
|
|
|
|
|
|
Sale |
Contribution |
|
P/V
ratio |
100 |
25 |
|
|
? |
57,500 |
|
|
|
|
|
Sales = 57,500 * 100 = 2,30,000 |
|
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|
25 |
|
|
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|
Sales
should be Rs. 2,30,000/- to earn a profit of Rs. 40,000/- |
|
|
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Profit made when sale is 2,50,000 |
|
|
|
Margin of safety =
Actual – BEP sale |
|
|
|
2,50,000
– 70,000 = 1,80,000/- |
|
|
|
Profit
= M/s * P/V ratio |
|
|
|
Profit = 1,80,000 * 25% = 45,000/- |
|
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|
At a
sale of Rs. 2,50,000/- profit will be Rs. 45,000/- |
|
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M/s at a profit of 50,000/ |
|
|
|
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Profit
= M/s * P/V ratio |
|
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|
50,000
= M/s * |
|
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25/100 |
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M/S = 50,000 * 100/ 25 = 2,00,000/- |
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6. Also Ltd. Manufactures and sells four types
of products under the brand names. A, B, C and D. the sales mix in value
comprises 33 1/3%, 41 2/3%, 16 2/3% and 8 1/3% of A, B, C and D respectively.
The total budgeted sales (100%) are
Rs.60,000 per month. Operating
costs (percentage of selling price).
A-60%, B-68%, C-80%, D-40%.
Fixed costs = Rs.14,700 per month.
Calculate the breakeven point for the products on an
overall basis.
7.
The following data are obtained from the
records of a factory.
|
Particulars |
Rs. |
Rs. |
|
Sales 4,000 units @ Rs.25 each Materials consumed Labour charges Variable overheads Fixed overhead expenses Profit |
40,000 20,000 12,000 |
1,00,000 |
|
72,000 18,000 |
90,000 |
|
|
|
10,000 |
It is proposed to reduce the selling price by 20%. What
extra units should be sold to obtain the same amount of profit as above?
8.
Summarized figures from a manufacturer’s
budget as follows:
|
Particulars |
Quantity (units) |
Unit price Rs. |
Total Rs. |
|
Sales Marginal cost: Materials Wages |
17,500 |
180 50 45 |
31,50,000 8,75,000 7,87,500 |
|
Variable overheads |
|
36 |
6,30,000 |
|
|
|
131 |
22,92,500 |
Fixed costs are Rs.5,00,000. You
are required to calculate:
a)
The unit margin
b)
The profit P/V ratio.
c)
The total contribution,
d)
The effect on profit making and selling a
further 2,500 and
e) Additional
sales required to produce the same profit with unit sale price reduced to
Rs.162.
9.
Sales at 10,000 units @ Rs.20 per unit,
variable cost at Rs.10 per unit and fixed cost Rs.80,000. Find out the break –
even point in units as well as in amount and also the profit earned. What
should be the sales earning a profit of Rs.60,000.
10.
The profit for 1968 and 1969 are given
together with expenses:
|
Particulars |
1968 (Rs.) |
1969 (Rs.) |
|
Materials consumed Wages Overheads: Fixed Variable Net profit |
1,00,000 80,000 30,000 24,000 10,000 |
1,40,000 1,20,000 32,000 34,000 20,000 |
The wages rate was increased by 20% in 1969. Similarly
materials prices were higher by 10%. Sales prices increased by 10% in 1969.
Analyse the causes of increase in profit in 1969.
11.
Find out profit from the following data:
|
Particulars |
Rs. |
|
Sales Marginal cost Break-even point |
80,000 60,000 60,000 |
12.
Two business A, B Ltd X, Y Ltd. sell the
same type of product in the same type of market. Their budgeted profit and loss
accounts for the year ending 1988 are as follows:
1.
|
Particulars |
A, B
Ltd. Rs. |
|
X, Y Ltd Rs. |
|
|
Sales Less – variable costs 1,20,000 Fixed costs 15,000 |
|
|
1,00,000 35,000 |
1,50,000
|
1,50,000
You are required to
a)
Calculate the break-even point of each business,
and
b)
State which business is likely to earn greater
profits in conditions of-
(i) The heavy demand for the product and
(ii) the low demand for the product.
13.
The price structure of cycle made by the
Cycle Co. Ltd. is as follows:
|
Particulars |
Per (Rs.) |
cycle |
|
Materials Labour Variable overheads |
|
60 20 20 |
|
Total VC |
|
100 |
|
Fixed overheads Profit |
|
50 50 |
|
Selling price |
|
200 |
This is based on the manufacture
of one lakh cycles per annum. The company expects that due to competition, they
will have to reduce selling prices. However, they want to keep the total
profits intact. What level of production will have to be reduced i.e. how many
cycles will have to be made to get the same amount of profits if:
a) the
selling price is reduced by 10% and
b) the
selling price is reduced by 20%.
Solution:
|
Particulars |
Amount |
Amount |
|
|
|
For 1 lackh units |
|
Old
cost structure |
p.u |
Total |
|
Sales |
200 |
2,00,00,000 |
|
(-)
Variable cost |
100 |
1,00,00,000 |
|
Contribution |
|
1,00,00,000 |
|
(--)
Fixed cost |
50 |
50,00,000 |
|
Profit |
|
50,00,000 |
|
|
|
|
|
|
|
|
|
If s.p. reduced by 10% |
|
|
|
Sales |
|
200 |
|
(--)
Reduction 10% |
|
-20 |
|
New
S.P. |
|
180 |
|
(-)
Variable cost |
|
-100 |
|
New
Contribution |
|
80 |
|
|
|
|
|
P/V
ratio = Contribution * 100 = |
80 * 100 |
= 44.44% |
|
Sale |
180 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale to earn profit of Rs. 50,00,000/- |
|
|
|
Contribution
(bal. fig) |
|
1,00,00,000 |
|
(--)
Fixed cost |
|
-50,00,000 |
|
Profit |
|
50,00,000 |
|
|
|
|
|
|
Unit |
Contribution |
|
|
1 |
80 |
|
|
? |
1Cr |
|
1,00,000
/ 80 = 1,25,000 units |
|
|
14.
A company reported its operating results for
1976 and 1977 as follows:
|
Particulars |
|
1976 Rs. |
1977 Rs. |
|
Sales Less: Cost sales Fixed Variables |
of |
8,00,000 6,40,000 |
9,03,00 0 6,70,00 0 |
|
1,60,000 1,80,000 |
2,33,00 0 1,90,00 0 |
||
|
(-)20,00 0 |
43,000 |
During
1977 the selling prices were raised by five per cent. Prepare a statement
bringing out the factors leading to the change in the profit earned in 1977
over 1976.
15.
The following figures for profit and sales
are obtained from the accounts of X Co.
Ltd.
|
Year |
Sales |
Profit |
|
1980 1981 |
20,000 30,000 |
2,000 4,000 |
Calculate a) P/V ratio, b) fixed cost, c) break-even
sales, d) profit at sale of Rs.40,000 and e) sales to earn a profit of
Rs.5,000.
16.
When a selling price of product is reduced
to Rs.12 from Rs.15, its sales are increased from 2,500 units 3,500 units. What
is the extent of increase and its marginal effect?
17.
From the following information, calculate.
i) the
P/V ratio, ii) the break-even point and iii) the margin of safety Total sales
Rs.2,40,000, selling price per unit Rs.100 Variable cost per unit Rs.50. Fixed
cost Rs.80,000.
If the selling price is reduced to Rs.85, how much will
the margin of safety reduced by.
18.
PQ Co. Ltd. has an overall P/V ratio of 35%.
The marginal cost of product is estimated to be Rs.25. Determine the selling
price of a product.
Solutifon:
|
Particulars |
% |
Rs |
|
Sales |
100 |
? |
|
(-)
V.C |
65 |
25 |
|
Contro. |
35 |
|
|
|
|
|
|
S.P
= 25 * 100 / 65 = 38.46/- |
|
|
19.
From the following particulars, find out (a)
the contribution (b) the break-even points in units (c) the margin of safety
and (d) the profit.
|
Particulars |
Rs. |
|
Total fixed costs Total variable costs
Total sales Units sold |
4,500 7,500 21,00 0 5,000 |
(e) Also calculate the sales volume to earn a profit of
Rs.6,000.
20.
From the following information, find out:
The sales break-even point,
The profit/volume (P/V) ratio,
The margin of safety, and
The sales required for a profit
of Rs.25,000.
|
Particulars |
Rs. |
|
Present sales (at Rs.10 per unit) Fixed expenses Variable expenses at Rs.6 per unit |
1,00,00 0 30,000 |
21.
From the following data, which product would
you recommend for manufacture in a factory time being the key factor.
|
Particulars |
Per unit of Product A |
Per unit of Product B |
|
Direct Material Direct labour at Re.1 per hour Variable overheads at two per hour Selling price Standard time to produce (hours) |
24 2 4 100 2 |
14 3 6 110 3 |
|
|
|
|
Solution>
|
Particulars |
Amount |
Amount |
|
|
A |
B |
|
Sales |
100 |
110 |
|
(-)
V.C. ( Mat + Lab ++VOH) |
-30 |
-23 |
|
Contribution
from production of single unit |
70 |
87 |
|
No.
of hours |
2 hours |
3 hours |
|
Contribution
per hour |
35 |
29 |
|
|
|
|
|
Since contribution
per hour of Product A Is more than contribution per hour of product B it is
advisable to produce and sell product A , if time is key factor. |
|
|
22.
Calculate the break-even point from the
following date:
|
Particulars |
First year |
Second year |
|
Sales Profit |
40,000 5,000 |
45,000 7,000 |
23.
From the following data, draw a simple
break-even chart:
|
Particulars |
Rs. |
|
Selling price per unit Trade discount (%) Direct material cost per unit Direct labour cost per unit Fixed overheads |
10 5 3 2 10,00 0 |
24.
Fixed overheads Rs.1.20 lakhs Variable
overheads rs.2.00 lakhs
Direct materials Rs.4.10 lakhs
Sales Rs.10.00 lakhs
Calculate the break-even point and the P/V ratio.
25.
From the following data, calculate the
break-even point expressed in terms of units and also the new break-even point,
if the selling price is reduced by 10%.
|
Fixed expenses Depreciation Salaries Variable expenses (per unit) Material Labour Selling price |
Rs.1,00,00 0 Rs.1,00,00 0 Rs.3 Rs.2 Rs.10 |
Solution:
|
Particulars |
Amount |
Amount |
|
|
|
|
|
Sales
p.u. |
|
10 |
|
(--)
V.C. |
|
-5 |
|
Contribution |
|
5 |
|
|
|
|
|
BEP in units = Fixed
cost |
2,00,000 |
40,000 unit |
|
Contribution P.U. |
5 per unit |
|
|
|
|
|
|
If
S.P. is reduced by 10% |
|
|
|
Old
S.P |
|
10 |
|
(-)
reduced by 10% |
|
-1 |
|
New
S.P. |
|
9 |
|
(-)
V.C. |
|
-5 |
|
New
contribution |
|
4 |
|
|
|
|
|
NEW BEP = Fixed
cost |
2,00,000 |
50,000 units |
|
Contribution p.u. |
4 |
|
26.
From the following particulars calculate the
break-even point:
|
Variable cost per unit Fixed expenses Selling price per unit |
Rs.12 Rs.60,00 0 Rs.18 |
27.
The P/V ratio of a firm dealing in surgical
instruments is 40% and its margin of safety is 50% when sales are Rs.2,00,000.
Prepare a marginal cost statement.
Solution:
|
Particulars |
|
Amount |
Amount |
|
|
|
|
|
|
Sale |
|
|
2,00,000 |
|
(-) Variable cost (Bal. fig) |
|
|
-1,20,000 |
|
Contribution 40% (Given
) |
|
|
80,000 |
|
(-) Fixed cost (Bal.
fig) |
|
|
- 40,000 |
|
Profit |
|
|
40,000 |
|
|
|
|
|
|
% of Margin of safety = M/S |
*
100 = 50% |
|
|
|
Actual Sale |
|
|
|
|
|
|
|
|
|
M/S *
100 = 50 |
|
|
|
|
2,00,000 |
|
|
|
|
|
|
|
|
|
M/S = 2,00,000 * 50 /100 = 1,00,000/- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit
= M/s * P/V ratio |
|
|
|
|
|
|
|
|
|
Profit = 1,00,000 * 40% = 40,000/- |
|
|
|
|
|
|
|
|
28.
Calculate the margin of safety from the
following data:
|
Particulars |
|
Ruby & Co. (Rs.) |
Ratna &Co. (Rs.) |
|
Sales Cost Fixed: Ruby & Co. Ratna & Co. Variable: Ruby & Co. Ratna & Co. |
Rs. 30,000 50,000 50,000 30,000 |
1,00,000 80,000 |
1,00,000 80,000 |
|
Profit |
|
20,000 |
20,000 |
29.
From the following particulars, calculate
the break-even point and the turnover required to earn a profit of rs.36,000.
|
Particulars |
Rs. |
|
Fixed overheads Variable cost per unit Selling price |
1,80,00 0 2 20 |
If the company is earning a profit of Rs.36,000 express
the margin of safety available to it.
30.
Bharat Ltd. incurred a total cost of
rs.40,000 on a sales of Rs.45,000 in the first half of a year and Rs.43,000
cost on sales of Rs.50,000 in the second half of the year.
Assuming that costs and prices remained the same,
calculate for the entire year: a) P/V ratio,
b)
Break-even point
c)
Fixed expenses and
d)
Percentage of margin of safety.
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