Exercises on CVP Analysis Calculate P/V ratio in each of the following independent cases Fixed cost Rs.

9,600, sales Rs. 25,200, profit Rs. 3000. Variable cost to sales ratio = 86% Selling price Rs. 50, marginal cost Rs.40 Variable cost Rs.20, contribution Rs. 5 Contribution Rs 75, Sales Rs. 225 When sales increase from Rs. 20,000 to Rs. 24,000, the profit increases from Rs. 1,400 to Rs. 1,800. (Sol. 50%; 14%; 20%; 20%; 331/3%; 10%) 2. Following data is given: Total fixed cost =Rs. 12,000 Selling Price =Rs. 12 per unit Variable Cost =Rs. 9 per unit Find Break-Even Analysis in Units and Rupees. (Sol. 4000 units; Rs.48000) 3. Following data is given: Fixed cost =Rs. 12,000(total) Selling Price =Rs. 12 per unit Variable Cost =Rs. 9 per unit i) Calculate profit if the sale are a) Rs.60, 000 b) Rs.1, 00,000. (Sol. Rs.3,000; Rs.13,000) ii) What will be the amount of sales if it is desired to earn a profit of a) Rs.6,000 b) Rs.15,000 (Sol. Rs.72,000; Rs.1,08,000) 4. Following data is given: Break-even point =Rs. 30,000 Profit =Rs. 1500 Fixed Cost =Rs. 6000 What is the amount of variable cost? (Sol. Rs.30, 000) 5. Following data is given: Sales =4000 units @ Rs. 10 per unit Break-even point =1,500 units Fixed Cost =Rs. 3,000 What is the amount of a) variable cost; and b) profit? (Sol. Rs.8,000; Rs.5,000) 6. Following data is given: Break-even sales =Rs. 40,000 Profit earned =Rs. 2000 Fixed Cost =Rs. 8,000 What are the actual sales? (Sol. Rs.50,000) 7. Following data is given: Fixed cost =Rs. 6, 00,000(total) 1. i) ii) iii) iv) v) vi)

Selling Price =Rs. 150 per unit Variable Cost =Rs. 90 per unit i) What is the break-even point? (Sol. 10,000 units) ii) What is the selling price per unit if break-even point is 12,000 units? (Sol. Rs.140) 8. The following formation is given: Fixed cost =Rs. 30,000 Sales =Rs. 2, 00,000 Variable Cost =Rs. 1, 20,000 Calculate a) Break-even point (Sol. Rs.75,000) b) New break-even point if selling price is reduced by 10% (Sol. Rs.90,000) c) New break-even point if variablecost increases by 10% (Sol. Rs.88,235 app.) d) New break-even point if fixed cost increases by 10% (Sol. Rs.82,500) 9. You are given the following data: Fixed expenses Rs. 4000 Break-even point Rs. 10,000 Calculate i) P/V ratio (Sol.40%) ii) Profit when sales are Rs. 20,000 (Sol. Rs.4,000) iii) New break-even point if selling price is reduced by 20% (Sol. Rs.16,000) 10. The following information is obtained from A Ltd for the year 2004 Fixed cost =Rs. 15,000 Sales =Rs. 60,000 Variable Cost =Rs. 30,000 a) Calculate the P/V ratio, B.E. point and margin of safety at this level (Sol. 50%; Rs.30,000, Rs.30,00) b) Calculate the effect of 10% increase in sale price (Sol. BEP Rs.27,500; Safety margin Rs.38,500 ) c) Calculate the effect of 10% decrease in sale price (Sol. BEP Rs.33,750; Safety margin Rs.20,250 ) 11. The profit/volume ratio of A Ltd is 50% and the margin of safety is 40%. You are required to work out the net profit and break-even point if sale volume is Rs. 10, 00,000. (Sol. Net profit Rs.2,00,000; 12. Calculate margin of safety in each of the following independent situations a) Break-even point 40%, Actual sales Rs. 40,000 (Sol. Rs.24,000) b) Actual sales 40,000 units, break-even point 25,000 units (Sol. 15,000 units) c) Break-even point 75% (Sol. 25%)

d) P/V ratio 40%, Profit Rs. 35,000 (Sol. Rs.87,500) e) Contribution per unit Rs. 20, Profit Rs. 15,000 (Sol.750 units) 13. Calculate margin of safety in each of the independent situations a) Fixed cost Rs. 10,000; P/V ratio 50% (Sol. Rs.20,000) b) Fixed cost Rs. 15,000; contribution Rs. 3 per unit (Sol.5000 units) c) Margin of safety 20% (Sol. 80% of sales) d) Fixed cost Rs. 9,000; Variable cost to sales ration = 60% (Sol. Rs.22,500) e) Actual sales Rs. 50,000; Margin of safety 30% (Sol. Rs.35,000) f) Profit Rs. 30,000; Margin of safety 20%, variable cost is 70% of sales (Sol. Rs.4,00,000) g) Margin of safety 70,000; Actual sales Rs. 4,00,000 (Sol. Rs.3,30,000) h) Actual sales 10,000 units, Margin of safety 2500 units (Sol.7500 units) 14. Short Questions: i) Margin of Safety 60%, Fixed cost Rs. 2, 10,000; Variable cost ratio to sales 70%. Determine the amount of actual sales (Sol. Rs.17,50,000) ii) BE point is Rs. 40,000; Fixed cost Rs. 15,000. What is the P/V ratio? (Sol. 37.5%) iii) Fixed cost Rs. 12,000; Actual sales Rs. 48000. Margin of safety Rs. 8,000. What is the P/V ratio? (Sol. 30%) iv) Find out the BE point when P/V ratio 40%, Margin of safety 30%. Profit Rs. 12,000 (Sol. Rs.70,000) v) Break-even point occurs at 60% of capacity sales and P/V ratio is 30%. What is the amount of capacity sales when fixed cost is Rs. 1, 80,000? Also find the amount of profit at 72% of capacity sales. (Sol. Rs.10,00,000; 36,000) vi) What is the amount of margin of safety when profit is Rs. 50,000 contribution Rs. 70,000 and sales Rs. 7, 00,000? Also determine the break-even point (Sol. Rs.5,00,000; Rs.2,00,000) vii) Calculate the amount of actual sales when profit Rs. 20,000, break-even point Rs. 50,000 and fixed cost Rs. 25,000 (Sol. Rs.90,000) viii) Variable cost is 80% of sales and margin of safety is 40%. What is the amount of fixed cost if sales are Rs. 2, 00,000? (Sol. Rs.24,000) 15. The following data is given: Rs. following

Selling price 20 Variable manufacturing costs 11 Variable selling costs 3 Fixed factory overheads 5, 40,000 per year Fixed selling costs 2, 52,000 per year You are required to compute a) BEP expressed in amount of sales in rupees b) Number of units that must be sold to earn a profit of Rs.60,000 per year c) How many units must be sold to earn a net income of 10% of sales? (Sol. Rs.26, 40,000; 1, 42,000 units; 1, 98,000 units) 16. A) A company has fixed expenses of Rs.90, 000 with sales at Rs.3, 00,000 and a profit of Rs.60, 000. Calculate the P/V ratio. If in the next period, the company suffered a loss of Rs.30, 000, calculate the sales volume. B) What is the margin of safety for a profit of Rs.60,000 in (A) above (Sol. 50%; Rs.1,20,000; Rs.1,20,000) 17. From the following data calculate the BEP: Direct material per unit Rs.3 Direct labour per unit Rs.2 Fixed overheads (total) Rs.10, 000 Variable overheads 100% on direct labour Selling price per unit Rs.10 Trade discount 5% Also determine the net profits, if sales are above the BEP (Hint: Trade discount is deducted from the selling price before calculating contribution) (Sol. 4000 units; Rs.1000) 18. You are given the following data for the year Particulars Rs. % Variable cost 6,00,000 60 Fixed cost 3,00,000 30 Net profit 1,00,000 10 Sales 10,00,000 100 Find out a) Break-even point b) P/V Ratio c) Margin of safety (Sol. Rs.7,50,000; 40%; Rs.2,50,000) 19. You are given the following data: Year Sales Profit 2009 2010 Find out a) P/V Ratio b) Fixed cost c) Break-even level of sales Rs.Lakh 150 30 Rs. Lakh 200 50

d) Profit or loss when sales are Rs.280 lakhs e) Sales required to earn a profit of Rs.90 lakhs (Sol. 40%; Rs.30 lakhs; Rs.75 lakhs; Rs.300 lakhs; Rs.82 lakhs)