Assignment IV

CVP Analysis - Multi product case

Q.1 A Ltd. manufacturing and sells four types of products. The sales mix in value
comprise of:
Products Percentage
A1 33.1/3
A2 41.2/3
A3 16.2/3
A4 8.1/3
The total budgeted sales are Rs. 6,00,000 per month. The variable costs are: A-1
60% of selling price, A-2 68% of selling price, A-3 80% of selling price and A-4 40% of
selling price. Fixed cost Rs. 1,59,000 per month. Find break even point.

Q.2 A Company produces and sells two items A&B. Its F.C. is Rs.13,77,000 p.a. VC per
unit of A Rs. 7.80. VC per unit of B Rs. 8.90. Selling price A Rs. 15, B Rs. 20, 80% of
total sales revenue is realized from sale of B. Find B.E.P. What should be sales revenue
to result in 9 per cent post-tax profit on sales. Tax rate 55 per cent.

(Hint: Before tax Income = Net Income × 100

100 – Tax rate)

Q.3 A and B are similar plants under the same management who want them to be merged
for better operation. The details are as follows:
A Plant B Plant
Capacity operated 100% 70%
Turnover Rs. 200 Rs.210
V.C. Rs. 150 Rs. 140
F.C. Rs. 40 Rs. 50
(in Rs. lakhs)
Find out (i) the capacity of the merged plant for break even (ii) turnover from the merged
plant to give profit of Rs. 30 lakhs