Baran & co, manufactures toys.

The company has 5 heads of production and incurs both fixed and variable costs
in the production of toys. The company's sales price per unit is ₹ 800.
The costs are listed below

BASE YEAR Units Cost Per Unit

Sale Price per unit 5000 900
Sales (Units)
Sales 5000

Less:Variable Cost (per unit)

Direct Material 5000 150
Direct Labour 5000 75
Variable Overheads 5000 25
Sales Comission 5000 25
Packaging Cost 5000 12.5
Contribution

Less:Fixed Cost
Rent 5000 100
Salaries 5000 250
Depreciation 5000 50
Electricity Charges 5000 10
Insurance 5000 25
Utilites 5000 15

Create a Cost Sheet

Prepare a Flexible Budget
Do CVP analysis

In this scenario, the company sells 5,000 toys in a month. The total variable cost incurred by the company
is ₹ 1437500 which is the sum of the variable cost per unit multiplied by the number of units sold. The
contribution margin is the sales revenue minus the variable costs, which is ₹ 2562500 . After deducting the
fixed costs of ₹ 2200000.The company earns a profit of ₹ 362500 .
th fixed and variable costs

Total
900

5000 4500000

750000
375000
125000
125000
62500 1437500
3062500

500000
1250000
250000
50000
125000
75000 2250000

red by the company

f units sold. The
. After deducting the
BASE YEAR Units Cost Per Unit Total
Sale Price per unit 5000 900 900
Sales (Units)
Sales 5000 5000

Less:Variable Cost (per unit)

Direct Material 150 5000 150 750000
Direct Labour 75 5000 75 375000
Variable Overheads 25 5000 25 125000
Sales Comission 25 5000 25 125000
Packaging Cost 12.50 5000 12.5 62500
Contribution

Less:Fixed Cost
Rent 5000 100 500000
Salaries 5000 250 1250000
Depreciation 5000 50 250000
Electricity Charges 5000 10 50000
Insurance 5000 25 125000
Utilites 5000 15 75000

Profit
Profit Per Unit
Assumptions Contribution Per Unit
Direct Material Price increased by 10% Year 1 612.5
Packaging Cost decreased by 10% Year 2 ₹ 598.75
Year 3 ₹ 583.38
Fixed Cost Year 4 ₹ 566.24
Rent Increased by 10% from 4th year Year 5 ₹ 567.15
Utilities Decreased by 10% from 4th Year
Sales Quantity Increase by 1000 each y\ear

ANALYSIS
 YEAR 2
Sale Price Per Unit 900
Sale (units) 6000
4500000 Increased sales ₹ 5,400,000

Less:Variable Cost (per unit)

Direct Material* 165 ₹ 990,000
Direct Labour 75 ₹ 450,000
Variable Overheads 25 ₹ 150,000
Sales Comission 25 ₹ 150,000
1437500 Packaging Cost* 11.25 ₹ 67,500
3062500 Contribution ₹ 3,592,500

Less:Fixed Cost
Rent 100 600000
Salaries 250 1500000
Depreciation 50 300000
Electricity Chagres 60000
Insurance 25 150000
2250000 Utilites 90000 2700000
Profit ₹ 892,500
812500 Profit Per Unit ₹ 148.75
162.5
Year 3 Year 4
Sale Price Per Uni 900 Sale Price Per Unit 900
Sale (units) 7000 Sale (units) 8000
Increased sales ₹ 6,300,000 Increased sales

Less:Variable Cost (per unit) Less:Variable Cost (per unit)

Direct Material* 181.5 1270500 Direct Material* 199.65
Direct Labour 525,000 Direct Labour
Variable Overheads 175000 Variable Overheads 25
Sales Comission 175000 Sales Comission
Packaging Cost* 10.125 70875 Packaging Cost* 9.1125
Contribution ₹ 4,083,625 Contribution

Less:Fixed Cost Less:Fixed Cost

Rent 100 700000 Rent 100
Salaries 1750000 Salaries
Depreciation 350000 Depreciation
Electircity Charges 70000 Electricity Charges
Insurance 175000 Insurance
Utilites 105000 3150000 Utilites 15
Profit ₹ 933,625 Profit
Profit Per Unit ₹ 133.38 Profitt Per Unit
 Year 5
Sale Price Per Uni 900
Sale (units) 9000
₹ 7,200,000 Increased sales ₹ 8,100,000

Less:Variable Cost (per unit)

1597200 Direct Material* 219.615 1796850
600,000 Direct Labour 675,000
200000 Variable Overhea 25 225000
200000 Sales Comission 225000
72900 Packaging Cost* 8.20125 73811.25
₹ 4,529,900 Contribution ₹ 5,104,339

Less:Fixed Cost
800000 Rent* 110 990000
2000000 Salaries 2250000
400000 Depreciation 450000
80000 Electricity Charges 90000
200000 Insurance 225000
120000 3600000 Utilites* 13.5 121500 4126500
₹ 929,900 Profit ₹ 977,839
₹ 116.24 Profit Per Unit ₹ 108.65
scenario
1) Sales Quantity increase by 9.5% every year.
2) Cost of packaging increases by rs 1.5 pu on & from 3rd year.
3) Labour cost increases by 15%.
4) In the 3rd year commission increased by Rs 2.5 pu.
5) Depreciated was decreased by Rs 5 pu on & from 3rd year.
6)Rent increased by Rs 50000 in value.
7) Electricity charges decrease by 10% on & from 2nd year due to compensation by government.
8) Utilies consumption increased by Rs 1.5 pu every year .
9) Salaries was increased by Rs 5 pu every year.
10) Direct material got cheaper by Rs 10 pu on & from 3rd year.
tion by government.
YEAR 1
Base Year Scenario 1 Scenario 2 Scenario 3 Scenario 4
PV RATIO 68.06% 68.06% 68.06% 66.81% 68.06%

BEP (RS) ₹ 33,061.22 ₹ 36,202.04 ₹ 33,061.22 ₹ 33,679.83 ₹ 33,061.22

BEP (Qty) 3673.47 4022.45 3673.47 3742.20 3673.469387755

MOS (RS) ₹ 11,938.78 ₹ 13,072.96 ₹ 11,938.78 ₹ 11,320.17 ₹ 11,938.78

MOS(Oty) 1326.530612245 1452.551020408 1326.530612245 1257.796257796 1326.530612245

PV Ratio= (𝑇𝑜𝑡𝑎𝑙 𝐶𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛)/(𝑇𝑜𝑡𝑎𝑙 𝑆𝑎𝑙𝑒𝑠

𝑉𝑎𝑙𝑢𝑒 )∗100

Break Even Point(Rs)=(𝐹𝑖𝑥𝑒𝑑 𝐶𝑜𝑠𝑡𝑠)/(𝑃𝑉 𝑅𝑎𝑡𝑖𝑜)

Break Even Point(Qty)=(𝐹𝑖𝑥𝑒𝑑

𝐶𝑜𝑠𝑡𝑠)/(𝐶𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑃𝑒𝑟 𝑈𝑛𝑖𝑡)

Margin of Safety(Rs)=(𝑃𝑟𝑜𝑓𝑖𝑡 )/(𝑃𝑣 𝑅𝑎𝑡𝑖𝑜)

Margin of Safety(Qty)=(𝑃𝑟𝑜𝑓𝑖𝑡 )/(𝐶𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛

𝑃𝑒𝑟 𝑈𝑛𝑖𝑡 )
Scenario 5 Scenario 6 Scenario 7 Scenario 8 Scenario 9 Scenario 10
68.06% 68.06% 68.06% 68.06% 68.06% 68.06%

₹ 33,061.22 ₹ 33,795.92 ₹ 33,061.22 ₹ 33,171.43 ₹ 33,428.57 ₹ 33,061.22

3673.46938776 3755.10204082 3673.46938776 3685.71428571 3714.28571429 3673.46938776

₹ 11,938.78 ₹ 11,204.08 ₹ 11,938.78 ₹ 11,828.57 ₹ 2.31 ₹ 11,938.78

1326.53061224 1244.89795918 1326.53061224 1314.28571429 0.25714285714 1326.53061224

YEAR 2
Base Year Scenario 1 Scenario 2 Scenario 3 Scenario 4
PV RATIO 66.53% 69.43% 66.53% 65.28% 66.53%

BEP (RS) ₹ 40,584.55 ₹ 38,887.10 ₹ 40,584.55 ₹ 41,361.70 ₹ 40,584.55

BEP (Qty) 4509.39457203 4320.78918524 4509.39457203 4595.74468085 4509.39457203

MOS (RS) ₹ 13,415.45 ₹ 20,242.90 ₹ 13,415.45 ₹ 12,638.30 ₹ 13,415.45

MOS(Oty) 1490.60542797 2249.21081476 1490.60542797 1404.25531915 1490.60542797

Scenario 5 Scenario 6 Scenario 7 Scenario 8 Scenario 9 Scenario 10
66.53% 66.53% 66.53% 66.53% 66.53% 66.53%

₹ 40,584.55 ₹ 41,336.12 ₹ 40,494.36 ₹ 40,719.83 ₹ 41,035.49 ₹ 40,584.55

4509.39457203 4592.90187891 4499.3736952 4524.42588727 4559.49895616 4509.39457203

₹ 13,415.45 ₹ 12,663.88 ₹ 13,505.64 ₹ 13,280.17 ₹ 12,964.51 ₹ 13,415.45

1490.60542797 1407.09812109 1500.6263048 1475.57411273 1440.50104384 1490.60542797

YEAR 3
Base Year Scenario 1 Scenario 2 Scenario 3 Scenario 4
PV RATIO 64.82% 67.87% 64.65% 71.90% 67.32%

BEP (RS) ₹ 48,596.53 ₹ 46,411.14 ₹ 48,721.80 ₹ 43,809.88 ₹ 46,792.11

BEP (Qty) 5399.61431326 5156.79312278 5413.53383459 4867.76458122 5199.12286907

MOS (RS) ₹ 14,403.47 ₹ 22,573.86 ₹ 14,278.20 ₹ 19,190.12 ₹ 16,207.89

MOS(Oty) 1600.38568674 2508.20687722 1586.46616541 2132.23541878 1800.87713093

Scenario 5 Scenario 6 Scenario 7 Scenario 8 Scenario 9 Scenario 10
64.82% 64.82% 64.82% 64.82% 64.82% 65.93%

₹ 48,056.57 ₹ 49,367.90 ₹ 48,488.54 ₹ 47,138.86 ₹ 49,136.49 ₹ 47,777.54

5339.61859867 5485.32247697 5387.61517034 5237.65159631 5459.61002786 5308.61596798

₹ 14,943.43 ₹ 13,632.10 ₹ 14,511.46 ₹ 15,861.14 ₹ 13,863.51 ₹ 15,222.46

1660.38140133 1514.67752303 1612.38482966 1762.34840369 1540.38997214 1691.38403202

YEAR 4
Base Year Scenario 1 Scenario 2 Scenario 3 Scenario 4
PV RATIO 62.92% 65.41% 62.75% 61.67% 62.92%

BEP (RS) ₹ 57,219.81 ₹ 55,153.91 ₹ 57,371.79 ₹ 58,379.69 ₹ 57,219.81

BEP (Qty) 6357.75624186 6128.21191026 6374.64308639 6486.63258181 6357.75624186

MOS (RS) ₹ 14,780.19 ₹ 23,686.09 ₹ 14,628.21 ₹ 13,620.31 ₹ 14,780.19

MOS(Oty) 1642.24375814 2631.78808974 1625.35691361 1513.36741819 1642.24375814

Scenario 5 Scenario 6 Scenario 7 Scenario 8 Scenario 9 Scenario 10
62.92% 62.92% 62.92% 62.92% 62.92% 62.92%

₹ 56,584.03 ₹ 58,014.53 ₹ 57,092.65 ₹ 57,410.54 ₹ 57,855.58 ₹ 57,219.81

6287.11450584 6446.05841189 6343.62789466 6378.94876267 6428.39797788 6357.75624186

₹ 15,415.97 ₹ 13,985.47 ₹ 14,907.35 ₹ 14,589.46 ₹ 14,144.42 ₹ 14,780.19

1712.88549416 1553.94158811 1656.37210534 1621.05123733 1571.60202212 1642.24375814

YEAR 5
Base Year Scenario 1 Scenario 2 Scenario 3 Scenario 4
PV RATIO 63.02% 66.63% 64.08% 63.00% 62.74%

BEP (RS) ₹ 65,482.82 ₹ 64,539.62 ₹ 63,767.44 ₹ 64,863.95 ₹ 65,135.18

BEP (Qty) 7275.86898499 7171.06877639 7085.27114236 7207.10569653 7237.24262207

MOS (RS) ₹ 15,517.18 ₹ 24,155.38 ₹ 17,232.56 ₹ 16,136.05 ₹ 15,864.82

MOS(Oty) 1724.13101501 2683.93122361 0.21311715846 1792.89430347 1762.75737793

Scenario 5 Scenario 6 Scenario 7 Scenario 8 Scenario 9 Scenario 10
64.25% 64.25% 64.25% 64.25% 64.25% 64.25%

₹ 62,901.65 ₹ 64,380.23 ₹ 64,084.51 ₹ 63,812.14 ₹ 64,302.41 ₹ 63,602.03

6989.07233892 7153.35833971 7120.50113955 7090.23792888 7144.71170809 7066.89202351

₹ 18,098.35 ₹ 16,619.77 ₹ 16,915.49 ₹ 17,187.86 ₹ 16,697.59 ₹ 17,397.97

2010.92766108 1846.64166029 1879.49886045 1909.76207112 1855.28829191 1933.10797649