Q1. From the following
calculate P/V Ratio, BES and MOS
Sales Rs
1,00,000
Fixed Cost Rs
20,000
Variable Cost Rs
60,000
Q2. Determine the amount of
fixed expenses from the following particulars:
Sales Rs
2,40,000
Direct Materials Rs 80,000
Direct Labour Rs 50,000
Variable Overheads Rs
20,000
Profit Rs 50,000
Q3. From the following
particulars, find out he selling price per unit if BEP is to be brought down to
9,000 units
Variable Cost per unit Rs 75
Fixed Expenses Rs
2,70,000
Selling price per unit Rs 100
Q4. From the following data of
AB Ltd, calculate BEP expressed in terms of units and also the new BEP if the
selling price is reduced by 10%
Fixed Expenses: Depreciation
Rs 1,00,000
Salaries
Rs 1,00,000
Variable Expenses: Materials Rs
3 per unit
Labour
Rs 2 per unit
Selling
Price Rs 10 per unit
Q5. You are given the
following data for the year 2009 of XYZ Co.
Variable Cost Rs 6,00,000
Fixed Cost Rs 3,00,000
Net Profit Rs 1,00,000
Sales Rs
10,00,000
Find out:
a.
PV
Ratio
b.
BEP
c.
Profit
when sales amounted to Rs 12,00,000
d.
Sales
required to earn a profit of Rs 2,00,000
Q6. From the following records
of VIP Ltd., calculate the Break-even point and the turnover required to earn a
profit of Rs 36,000.
Fixed Cost Rs 1,80,000
Variable Cost per unit Rs 2
Selling Price Rs 20
If the company is earning a
profit of Rs 36,000, find out the margin of safety available to it.
Q7. From the following data
calculate:
i.
Break-even
point expressed in amount of sales in rupees
ii.
No.
of units that must be sold to earn a profit of Rs 1,20,000 p.a.
iii.
How
many units are to be sold to earn net income of 15% of sales
Sales price per unit Rs 40
Variable manufacturing cost
per unit Rs 22, Variable selling
cost per unit Rs 3
Fixed Factory Overheads Rs
1,60,000, Fixed Selling
cost Rs 20,000
Q8. Reliable Batteries Co
furnishes you the following information:
Particulars
|
First Half (Rs)
|
Second Half (Rs)
|
Sales
|
8,10,000
|
10,26,000
|
|
Profit earned
|
21,600
|
64,800
|
From the above you are
required to compute the following assuming that the fixed cost remains the same
in both the periods:
i.
PV
Ratio
ii.
Fixed
Cost
iii.
Amount
of profit or loss when sales are Rs 6,48,000
iv.
The
amount of sales required to earn a profit of Rs 1,08,000
Q9. The sales and profits
during the last two years are as follows:
Years
|
Sales
|
Profit
|
2008
|
4,00,000
|
20,000
|
|
2009
|
5,00,000
|
40,000
|
You are required to
calculate:
i.
PV
Ratio
ii.
BEP
iii.
Sales
required to earn a profit of Rs 80,000
iv.
Profit
made when sales are Rs 7,00,000
v.
Margin
of Safety at a profit of Rs 50,000
vi.
Variable
cost of two years
Q10. Present the following
information to show to the management;
1.
The
marginal product cost and the contribution per unit
2.
The
total contribution and profits resulting from each of the following sales
mixtures
Particulars
|
Product
|
Per Unit
|
Direct Materials
|
A
B
|
10
9
|
|
Direct Wages
|
A
B
|
3
2
|
Fixed expenses Rs 800
Variable expenses are
allocated to products as 100% of direct wages
Sales Price
|
A
B
|
20
15
|
Sales Mixtures:
i.
1,000
units of product A and 2,000 units of B
ii.
1,500
units of product A and 1,500 units of B
iii.
2,000
units of product A and 1,000 units of B
Which product mix is most
profitable?
Q11. An analysis of Chandini
& co gives the following information:
Cost Element
|
Variable Cost
(% of sales)
|
Fixed Cost
Rs
|
Direct Materials
|
32.8
|
-
|
|
Direct Labour
|
28.4
|
-
|
|
Factory Overheads
|
12.6
|
1,89,900
|
|
Distribution Overheads
|
4.1
|
58,400
|
|
General Administration
Overheads
|
1.1
|
66,700
|
Budgeted sales are Rs
18,50,000. You are required to determine:
a.
The
break-even sales volume
b.
The
profit at the budgeted sales volume
c.
The
profit if actual sales:
i.
decrease
by 10%
ii.
increase
by 5%from budgeted sales.
Q12. Following are the records
of VL Ltd.:
Selling Price per unit Rs
10
Trade Discount 5%
Direct material cost per
unit Rs 3
Direct labour cost per unit
Rs 2
Fixed Overheads Rs 10,000
Variable Overheads 100% on
direct labour cost
a.
sales
are 10% above break-even volume, determine net profit,
b.
15%
above the break-even volume, determine the net profits.
Q13. A company has a PV ratio
of 40%. By what % must sales be increased to offset;
i.
10%
reduction in SP; ii.
20% reduction in SP
Q14. Atlas Ltd. manufactures
and sells four types of products under brand names A, B, C, D. Sales mix in
value comprises 33⅓%, 41⅔%, 16⅔% and 8⅓% of A, B, C and D respectively. The
total budgeted sales (100%) are Rs 60,000 per month.
Operating
Costs are:
Variable A 60% of Selling Price
B 68% of Selling Price
B 68% of Selling Price
C 80% of Selling Price
D 40% of Selling Price
Fixed costs Rs 14,700 per month
Calculate the break-even point for the products on an
overall basis.
It has been proposed to change sales mix as follows, the
total sales per month remaining Rs 60,000
Product A 25%
B 40%
C 30%
D 5%
Assuming the proposal is implemented, calculate the
break-even point.
Q15.
A multi-product company has the following costs and output data for the last
year:
Particulars
|
X
|
Y
|
Z
|
Sales mix (in value)
|
40%
|
35%
|
25%
|
|
Selling Price
|
Rs 20
|
Rs 25
|
Rs 30
|
|
Variable cost per unit
|
Rs 10
|
Rs 15
|
Rs 18
|
Total Fixed Costs Rs
1,50,000; Total Sales Rs 5,00,000
The
company proposes to replace product Z with product S. Estimated cost and output
data are:
Particulars
|
X
|
Y
|
S
|
Sales mix (in value)
|
50%
|
30%
|
20%
|
|
Selling Price
|
Rs 20
|
Rs 25
|
Rs 28
|
|
Variable cost per unit
|
Rs 10
|
Rs 15
|
Rs 14
|
Total Fixed Costs Rs
1,60,000
Total Sales Rs
4,50,000
Analyse the proposed change
and suggest what decision the company should take. Also state the break-even
point for the company as a whole in the two situations.
Q16. AXL Equipments
manufactures 4 components, the cost structure of which is given below:
Particulars
|
A
|
B
|
C
|
D
|
Direct Materials
|
80
|
100
|
100
|
120
|
|
Direct Labour
|
20
|
25
|
25
|
30
|
|
Variable Overheads
|
10
|
12
|
15
|
10
|
|
Fixed Overheads
|
15
|
23
|
20
|
20
|
|
Total
|
125
|
160
|
160
|
180
|
|
Output per machine hour
(units)
|
4
|
2
|
3
|
3
|
The key factor is machine
capacity. You are required to advice the management whether to make or buy them
from supplier who quotes following price:
A- Rs 115; B-
Rs 175; C- Rs 135 and D- Rs 185
Q17. XYZ Co. has the following
budget for the year 2009-10:
Sales (1,00,000 units @ Rs
20) Rs 20,00,000
Variable Cost Rs 10,00,000
Contribution Rs 10,00,000
Fixed Cost Rs
4,00,000
Net Profit Rs
6,00,000
From the above set of
information, find out:
a.
The
adjusted profits for 2009-10 if the following 2 set of changes are introduced
and also suggest which plan should be implemented?
|
Plan A
|
Plan B
|
|
Increase in price 20%
|
Decrease in price 20%
|
|
Decrease in volume 25%
|
Increase in volume 25%
|
|
Increase in variable cost
10%
|
Decrease in variable cost
10%
|
|
Increase in fixed cost 5%
|
Decrease in fixed cost 5%
|
b.
Find
the PV ratio and BEP under the two plans referred above?
Q18. A Ltd. and B Ltd. sell the same type
of product in the same type of market. You are furnished with their following
budgeted revenue statement for the financial year 2007-08.
Particulars
|
A Ltd.
|
B Ltd.
|
Variable Cost
|
4,50,000
|
4,80,000
|
|
Fixed Cost
|
1,10,000
|
80,000
|
|
|
5,60,000
|
5,60,000
|
|
Profit
|
40,000
|
40,000
|
|
Sales
|
6,00,000
|
6,00,000
|
You are required to calculate the
following in each case:
1.
PV
Ratio
2.
BEP
3.
Margin
of Safety
4.
Volume
of sales when the amount of profit is Rs 80,000
Decide business is likely to earn
greater profits in conditions of:
i.
Heavy
demand for the product
ii.
Low
demand for the product
Q19. The following particulars are
extracted from records of a company:
Particulars
|
Product A
|
Product B
|
Sales
|
Rs 100 p.u.
|
Rs 120 p.u.
|
|
Consumption of raw
materials
|
2 kg
|
3 kg
|
Material Cost
|
Rs 10 p.u.
|
Rs 15 p.u.
|
|
Direct Wage Cost
|
Rs 15 p.u.
|
Rs 10 p.u.
|
|
Direct Expenses
|
Rs 5 p.u.
|
Rs 6 p.u.
|
|
Machine hours used
|
3 hours
|
2hours
|
|
Overhead Expenses: Fixed
|
Rs 15 p.u.
|
Rs 10 p.u.
|
|
Variable
|
Rs 15 p.u.
|
Rs 20 p.u.
|
Direct Wages per hour is Rs 5. Comment
on the profitability of each product (both products need the same raw
materials) when:
a) Total sales potentials in
units is limited
b) Total sales potentials in
value is limited
c) Raw material is in short
supply
d) Production capacity (in
terms of machine hours) is a limiting factor.
Assuming raw materials as the key
factor, availability of which is 10,000 kg and maximum sales potential of each
product being 3,500 units, find the product mix which will yield the maximum
profit.
Q20. Profit for the year of High Hopes
Limited works out to 12.50% of capital employed, and relevant figures are as
under:
Sales Rs 5,00,000
Direct Materials Rs 2,50,000
Direct Labour Rs 1,00,000
Variable Overheads Rs 40,000
Capital Employed Rs 4,00,000
The new sales manager who has joined
the company recently estimates for the next year a profit of about 23% on
capital employed provided the volume of sales is increased by 10% and
simultaneously there is an increase in selling price of 4% and an overall cost
reduction in all elements of cost of 2%. Find out by computing in detail the
cost and profit for the next year, whether the proposal of sales manager can be
adopted?
Q21. Smooth Flow Ltd. manufactures
ballpoint pens. The present cost structure is as follows:
Direct Material 9 paise per unit
Direct Labour 3 paise
per unit
Direct Expenses 1
paise per unit
Other variable overheads 2 paise per unit
The company sells refills at 25 paise
Fixed cost per month are Rs 10,000
a) How many refills the
company must sell so that it does not incur any loss or make any profit?
b) How many refills the
company must sell to achieve profit of Rs 8,000 per month?
c) A firm in Dubai has offered
to buy 15,000 refills per month. However the price has to be much lower. This
order requires additional packing cost of 2 paise and forwarding cost of 1
paise per refill. If the company has to
produce this capacity, in addition to its normal output, can the offer be
accepted at a price of:
i. 16 paise
ii. 19 paise
Q22. The following data relate to
manufacturing company:
Plant capacity 4,00,000 units per annum. Present utilisation 40%
Actuals for the year 2006 were:
Selling price Rs 50 per unit
Materials cost Rs 20 per unit
Variable Manufacturing costs Rs 15 per
unit
Fixed costs Rs 27,00,000
In order to improve the capacity following
proposals are considered:
Reduce selling price by 10%
Spend additionally Rs 3,00,000 on
sales promotion
How many units should be made and sold
in order to earn a profit of Rs 5,00,000 per year?
Q23. East India Co. is currently working
at 50% capacity and produces 10,000 units. At 60% working, raw material cost
increases by 2% and selling price falls by 2%. At 80% working, raw material
cost increases by 5% and selling price falls by 5%. At 50% capacity working,
the product costs Rs 180 p.u. & is sold at Rs 200 p.u. The unit cost of Rs
180 is made up as follows:
Material Rs 100
Labour Rs 30
Factory overheads Rs 30 (40% fixed)
Administration overheads Rs 20 (50%
fixed)
Prepare a marginal cost statement
showing the estimated profit of the business when it is operated at 60% and 80%
capacity.
