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Task 1 KSBS Ltd. furnish the following information of its Product M. (Rs.) Production (units) Present 10,000 Selling price p.u. Variable cost p.u. Fixed cost p.a. 50 30 60,000 Proposed 10,000 40 30 60,000

Calculate the PV ratio, break-even point and margin of safety.

Particulars Contribution p.u. P.V. ratio

Present Proposed Rs.20 (Contribution p.u. / Selling price 40% p.u.)X100 Rs. 10 25%

Break-even (units)

point (Fixed cost / contribution p.u.)

3,000

6,000

Margin of safety (Units) (Actual sales - Break-even units) Break-even units as % to Total production Margin of safety as % to Total production

7,000 30% 70%

4,000 60% 40%

Interpretation: - The reduction in selling price from Rs. 50 to Rs. 40 per unit maintaining the same level of production, variable cost and fixed cost result in the following: (a) The reduction selling price has reduced the contribution per unit and since the P.V. ratio is the function of contribution to sales, it also has decreased from 40% to 25%. (b) The break-even units has increased from 3,000 to 6,000 units due to lower contribution per unit available to meet the total fixed costs. (c) The higher the break-even point means the lower the margin of safety and lower profitability.

1

Dr. Sudhindra Bhat MBA,ACS,CFA,MFM, PGDPM, PGDIR, M.Phil., PhD drbhatt2006@gmail.com

20 (P/U).000 units Determine the BEP.5 lakh In the following information you are required. The fixed cost.50. Find out the BEP in units as well as sales. selling identical products in the market. to calculate BEP. Sales are Rs.000 12. 10/=.00.5 lakh Y 5 lakh 3.000 6. 4 lakh. Var.00. The sales of a company are @ Rs. Budgeted output 80.CFA.000.Phil. If change in any of these variable means a change in profit.000 15. PGDIR.ACS. Task 4 There are two business D&Y. Task 6 2 Dr. PGDPM. Determine the BEP. * Sales VC FC Profit You are requested to calculate BEP for the two business.1. M.5 lakh 1 lakh 0. 4. producing a profit of Rs. Task 5 D 5 lakh 4 lakh 0. variable cost and selling price have direct impact on profit. Sudhindra Bhat MBA. 1.Cost Volume Profit Analysis Thus the lowering of selling price has resulted in increase of break-even point and lowering the margin of safety and P/V ratio. What will the new BEP.000 units. S P Rs.2. PhD drbhatt2006@gmail.5 lakh 0..MFM. The toll are the budget figures related to a particular year. (P/U) Rs.000 in period I.00. Task 2 Rs.90. producing a profit of Rs. 200 per unit Variable cost Fixed cost The capacity of the factory 20. Fixed expences Rs. 12. exp.com . How much profit is the company making? Task 3 Sales are Rs.000 in period II. If the SP is reduced by Rs.000.

Phil. FC . 3 Dr. whereas variable is Rs.V(r) BEP (Sales) Sales to earn a profit of Rs.6.000 .20.Cost Volume Profit Analysis KSBS Co. 2 3Fixed overhead . Fixed factory overhead is Rs. Cost of production is Rs.3.2/unit. 12. Calculate MOS Task 8 RKV company has a max.com OR direct labour cost Rs. S.08.60.40.400..Rs. 1. 10 1Trade discount . calculate. Sales 4.2.000 per annum. c) S.ACS.000 in a year.000 New BEP when S.100% Task 10 The following information is obtained from the books of Dr. 2.MFM.000 Profit at a sale of Rs. 60 p/unit & fixed cost Rs. 100000 Task 9 From the following information calculate PV (r)BEP 0SP (P/U) . 150000.00.P (P/U) to bring down the BEP to 1.00.P is Rs.CFA.000 P/annum. 1) 2) 3) 4) 5) P.50. Expenses of fixed nature is Rs.000 in a year.Rs.P is reduced by 10% : Task 7 Sales – Re.000 units per annum and the normal capacity is estimated at 3. Calculate. Profit .000 units.Rs. Raj Computers Ltd.100 each 6t the Mat.Rs. of units to be sold to earn a profit of Rs. PhD drbhatt2006@gmail.5% 2Direct Material cost (P/U) .000 units @ Rs.0. PGDPM. Selling & dist. M.50. a) (1) BEP (2) P/V (ratio) (3) Margin of safety b) No. Variable manufacturing cost including material & labour is Rs. produces a simple article £t sells it at Rs. PGDIR. 500000 . Sudhindra Bhat MBA. capacity of 4. 4 P/Units. 50 each Production data: Rs.40.

000 ---------Task 12 Determine the amount of fixed expenses from the following particulars: Rs. Variable Cost: Direct Material 4.CFA.000 20.000 40. PGDIR. (iv) The selling price to be fixed to bring down the break-even point to 500 under existing conditions.000 Direct Labour 50.250 ---------Total Cost 9. Sales 2.. M.50. (ii) The sales needed to earn a profit of 20% on sales.ACS.000 Calculate: (i) The number of units by selling which the company will be at break-even. PhD drbhatt2006@gmail.500 ---------Fixed Cost: Administrative expenses 1.000 30. if it is prop osed to reduce the selling price by 20% and 25%.com .MFM.000 Direct Material 80.500 Direct Wages 2.000 1. (iii) The extra units which would be sold to obtain the present profit.250 ---------Sales 15.Phil. Task 11 Prepare Marginal cost statement from the following particulars: Rs.70.000 30.Cost Volume Profit Analysis Materials Consumed Labour Cost Over heads (variable) Fixed overheads Profit 80.500 ---------8. PGDPM.750 Profit 5.000 4 Dr.500 Factory Overheads 1. Sudhindra Bhat MBA.000 Variable Overheads 20.

000 Capacity of production 2.00. PGDIR.000 Task 13 Fill in the blanks for each of the following independent situations: ------------------------------------------------------------------------------------------------------Case No.com .000 50.50.000 160 ? 80.CFA.00. M.00.000 Direct Material 9. Rs. -------------------------------------------------------------------------------------------------Fixed cost Variable cost Total Rs.00.000 42.000 36.00. PGDPM. From the data given in the table.000 Variable cost per unit 10 Selling price per unit 15 Task 15 The annual profit plan of KPMG Ltd.50.000 Budgeted profit 6.Phil. calculate the break-even point in units.000 0 II 2. 21 each) Budgeted Cost: Direct Labour 8.u. Rs.000 2.000 Total 14. -------------------------------------------------------------------------------------------------Budgeted Sales (2. PhD drbhatt2006@gmail.ACS..00.00. Rs.000 1.000 ? (2.000) III ? 15 75 ? 25. is given in the following table.00.000 Factory Overhead 6.00. Rs.MFM. ------------------------------------------------------------------------------------------------------I 15.000 Administrative expenses 5.000 ------------------------------------------------------------------------------------------------------Task 14 Calculate Break-Even Point from the following particulars.00.00.00.Cost Volume Profit Analysis Profit 60. Sudhindra Bhat MBA. of Selling Variable Contribution Fixed Profit units price cost margin cost sold p.000 units 5 Dr.000 Distribution expenses 3. Fixed expenses 1. % of sales Rs.00.00.000 22.000 ? 90 ? 30.000 @ Rs. Annual Profit Plan of ABC Ltd. Rs.000 2.

000 Variable cost 2.20.ACS.00. Sales 4. Numbers of units to be sold to earn a profit of Rs.00.000 Fixed cost 1. 40 Variable selling cost per unit Rs. Sales to earn a profit of Rs.E. 3 per unit Labour Rs. 22 Fixed factory overhead Rs. 1.E. Selling price per unit Rs. 2 per unit Selling price Rs.20. Rs.60.com .000 Variable expenses: Materials Rs.000 Fixed selling cost Rs.000 6 Dr. Sudhindra Bhat MBA. PGDPM.CFA. What will be the selling price per unit if B.000 Salaries Rs.000 units? Rs.P.80.000. PhD drbhatt2006@gmail.MFM.E. 1. Calculate Break-even point expressed in terms of units and also the new B. Variable cost per unit 75 Fixed expenses 2. 10 per unit Task 19 From the following data calculate 1.Cost Volume Profit Analysis -------------------------------------------------------------------------------------------------Task 16 The following information relating to a company is to you. 1.50.000 Ascertain how much the value of sales must be increased for the company to break-even. if selling price is reduced by 10%. PGDIR. M.70. 2.P.00. 20. 3 Variable manufacturing cost per unit Rs.. Task 17 From the following particulars find out the B. 1.Phil. 1.P. Fixed expenses: Depreciation Rs.000. is to be brought down to 9.000 Selling price per unit 100 Task 18 From the following data.

000? Workout for each model of pen. 30. sales. M. The estimated fixed cost would be around Rs.000 units.V.ACS.000 + 0. 10 Deluxe and Rs. Task 22 From the following information relating to ABC Ltd.000 Task 23 The cost. 30.000 and variable cost per unit would be Rs.MFM.Phil. respectively. 100 Profit Rs. 15 for Super star Rs. ratio (b) Break even point (c) Profit (d) Margin of safety Total Fixed Costs Rs. 10 p.500 Total Variable cost 7.. If the marginal cost and selling price of a product are Rs. 200 Fixed expenses Rs. ratio (b) B.u. PGDPM. Task 24 A company has earned a profit of Rs.7 X in which X represents sales and Y represents total cost.com .50 for Economy model. and sold if the selling price is reduced by Rs. 21. 4. 525 The number of cycles made and sold are 10. 75 Labour Rs.CFA.500 Total sales 15.000 (c) Also Calculate the Volume of sales to earn profit of Rs. Sudhindra Bhat MBA. (c) Sales volume required to earn a profit of Rs. 3. PhD drbhatt2006@gmail.000 during the year 2006. 25 and the same profile maintained.000. 70. 7 Dr.000 (d) Sales volume when there is a loss of Rs. find out the margin of safety. (b) How much should the manufacturer sell in order to make a profit of Rs. His marketing manager opines that the wholesalers and retailers have to be given atleast o discount. 6. 60.E. Task 21 A KSBS manufacturer has developed a new pen with unique features.00. Rs. 125 Variable expenses Rs. Find out: (i) Break even point (ii) How many cycles must be produced. (a) Calculate break-even point for each model of ball pen. you are required to find out (a) P. His design development executive has suggested three possible retail prices VlZ. volume and profit relationship of a company described by equation Y = Rs. PGDIR.50.V.Cost Volume Profit Analysis Task 20 The statement of cost of a cycle is as follows: Material Rs. 25 Selling price Rs. 8 and Rs. 3. Find out (a) P.. 7.

8 Dr. You are required to determine (i) the break-even sales volume (ii) the profit at the budgeted sales volume (iii) the profit.MFM. PGDPM. if actual sales (a) drop by 10% (b) increase by 5% from budgeted sales. Sales (units) 15.900 Distribution Overheads 4. 1. 6 per unit You are required to: (i) Find the P IV ratio. Ltd. 5. M.V. 10.1 66. 34. ratio is 50% Task 26 You are given: Margin of safety Rs.6 1. break-even point and margin of safety in each of the following cases: (a) Decrease of 10% in selling price: (b) Increase of 10% in variable costs : (c) Increase of sales volume by 2.Phil.700 Budgeted sales are Rs. 6. P. Profit Rs.000 which represents 40% of sales.8 Direct Labour 28. Sudhindra Bhat MBA.ACS. 18. ratio 50%.000 (20% of sales) P.000 Sales Rs. led to the following information: Cost element Variable cost Fixed cost (% of sales) Direct Material 32. Calculate (a) Sales (b) Break even sales (c) Fixed cost (d) Profit Task 27 An analysis of KSBS Manufacturing Co.com . PhD drbhatt2006@gmail.CFA. PGDIR.000 units : (d) Increase of Rs.1 58. has prepared the following budget estimates for the year 1999-2000.000 Variable costs Rs.50.000.Cost Volume Profit Analysis Task 25 You are required t6 calculate Break Even Volume from the following data: .400 Administrative Overheads 1. Task 28 Raj Ltd.89.50.V. break-even point and margin of safety.000 in fixed costs.4 Factory Overheads 12.. (ii) Calculate the revised P IV ratio.000 Fixed Expenses Rs.

Phil. PGDPM. PhD drbhatt2006@gmail. PGDIR.com . M.MFM.Cost Volume Profit Analysis Cost Volume Profit Analysis (Decision Making) 9 Dr.CFA.ACS. Sudhindra Bhat MBA..

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