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1. MNP Ltd sold 2,75,000 units of its product at 37.50 per unit. Variable costs are * 17.50 per unit
(manufacturing costs of 14 and selling cost 3.50 per unit.) Fixed costs are incurred uniformly
throughout the year and amounting to 35,00,000 (including depreciation of 15,00,000). There is
no beginning or ending inventories.
Required:
(i) Estimate breakeven sales level quantity and cash breakeven sales
level quantity:
(ii) Estimate the P/V ratio:
(iii) Estimate the number of units that must be sold to earn an income (EBIT) of 2,50,000; and
(iv) Estimate the sales level achieve an after-tax income (PAT) of 7 2,50,000. Assume 40% corporate
Income Tax rate.

2. When volume is 4,000 units, average cost is 3.75 per unit. The break-Even point is 6,000 units.
When volume is 5,000 units, average cost is 3.50 per unit.
Calculate:
(i) Variable Cost per unit:
(ii) Fixed Cost; and
(iii) Profit Volume Ratio.

3. Arnav Ltd. manufacture and sales its product R-9. The following figures have been collected
from cost records of last year for the product R-9:
Elements of Cost Variable Cost Portion Fixed
Cost Rs.
Direct Material 30% of Cost of Goods -
Sold
Direct Labour 15% of Cost of Goods -
Sold
Factory Overhead 10% of Cost of Goods 2,30,000
Sold
General & Administration 2% of Cost of Goods 71,000
Overhead Sold
Selling & Distribution 4% of Cost of Sales 68,000
Overhead
Last Year 5.000 units were sold at 185 per unit.

From the given data find the followings:

(i) Break-even Sales (in rupees):
(ii) Profit earned during last year;
(iii) Margin of Safety (in %); and
(iv) Profit if the sales were 10% less than the actual sales.

4. The ratio of variable cost to sales is 60%.

The break-even point occurs at 80% of the capacity sales.
(i) Find the capacity sales when fixed costs are 1,60,000.
(ii) Compute profit at 80% of the capacity sales. (iii) Find profit if sales are 5,70,000 and fixed cost
remain same as above.
(iv) Find sales, if desired profit is? 44.000, and fixed cost is 1,42,000.

5. a. If margin of safety is 2,40,000 (40% of sales) and P/V ratio is 30% of AB Ltd, calculate its:
(i) Break even sales; and
(ii) Amount of profit on sales of 9,00,000.
(b) X Ltd. has earned a contribution of 2,00,000 and net profit of 1,50,000 of sales of 8,00,000.
What is its margin of safety?
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6. The following information is given by Star Ltd.:

Margin of Safety Rs.
1,87,500
Total Cost Rs.
1,93,750
Margin of Safety 3,750
units
Break-even Sales 1,250
units

Required:
Calculate Profit, P/V Ratio, BEP Sale (in Rs) and Fixed Cost.

7. A manufacturing concern was operating at margin of safety of 40% in the year 2018 and was
selling its product at 75 per unit. Variable cost ratio to sales was 80% and fixed cost amounted to
5,40,000.
In the year 2019, the concern anticipates an increase in the variable costs and fixed costs by 15%
and 5% respectively.
You are required to:
Find out the selling price to be fixed in the year 2019 keeping in view that concern is willing to
maintain the same P/V ratio as it was in the year 2018.

8. Omega Ltd manufactures a product currently utilising 75% capacity with a turnover of
99,00,000 at 275 per unit. The cost data is as under:
Amount
(Rs.)
Direct Material per 96
unit
Direct Wages per unit 42
Variable Overhead per 18
unit
Semi-Variable 7,32,000
Overhead
PV Ratio 40%
Fixed overhead cost is 28,81,000 up to 80% level of activity, beyond this level, an additional
2,38,500 will be incurred

Required
(i) Break-even point in units and activity level at Break-even point, and (ii) Number of units to be
sold to earn profit of 25 per unit.

9. Arnav Ltd. is producing a single product, has the profit-volume ratio of 40%. The company
wishes to increase the selling price by 10% which will increase the variable cost by 5%. The fixed
overheads will increase from its present level of 20,00,000 to 30,00,000.
Required:
(i) Compute the company's original break-even point sales and the break-even point sales after the
increase; and
(ii) Estimated the sales value for the firm to make a profit of 74,50,000 after the increase
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10. The following information was obtained from the records of a manufacturing unit.
Rs. Rs.
Sales 80,000 units 20,00,000
@ 25
Material Consumed 8,00,000
Variable Overhead 2,00,000
Labour Charges 4,00,000
Fixed Overhead 3,60,000 17,60,000
Net Profit
2,40,000

Calculate:
(i) The number of units by selling which the company will neither lose nor gain anything:
(ii) The sales needed to earn a profit of 20% on sales;
(iii) The extra units which should be sold to obtain the present profit if it is proposed to reduce the
selling price by 20% and 25; and
(iv) The selling price to be fixed to bring down its Break-even point to 10,000 units under present
conditions.

11. A company has introduced a new product and marketed 20.000 units
Variable cost of the product is 20 per units and fixed overheads are ? 3,20,000.
You are required to:
(i) Calculate selling price per unit to earn a profit of 10% on sales value, BEP and Margin of Safety?
(ii) If the selling price is reduced by the company by 10% demand is expected to increase by 5,000
units, then what will be its impact on Profit, BEP and Margin of Safety?
(iii) Calculate Margin of Safety if profit is Rs. 64,000.

12. A dairy product company manufacturing baby food with a shelf life of one year furnishes the
following information:
(i) On 1* January, 2016, the company has an opening stock of 20,000 packets whose variable cost
is 180 per packet.
(ii) In 2015, production was 1,20,000 packets and the expected production in 2016 is 1.50,000
packets. Expected sales for 2016 is 1,60,000 packets.
(iii) In 2015, fixed cost per unit was 60 and it is expected to increase by 10% in 2016. The variable
cost is expected to increase by 25%. Selling price for 2016 has been fixed at 300 per packet.
You are required to calculate the Break-even volume in units for 2016.

13. The following figures are related to LM-Limited for the year ending 31st March, 2014:
Sales - 24,000 units @ 200 per unit: P/V Ratio 25% and Break-even point 50% of sales.
You are required to calculate:
(i) Fixed cost for the year:
(ii) Profit earned for the year;
(iii) Units to be sold to earn a target net profit of 11,00,000 for a year;
(iv) Number of units to be sold to earn a net income of 25% on cost;
(v) Selling price per unit if Break-even point is to be brought down by 4,000 units.

14. The following figures are related to KRB Limited for the year ended 31 March, 2020:
Sales 43,200 units @ 150 per unit:
P/V Ratio is 20% and Break-even point is 25% of Sales.
Calculate:
(i) Fixed cost for the year
(ii) Profit earned for the year:
(iii) Margin of Safety (in units) for the year;
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(iv) No. of units to be sold to earn a profit of Rs. 12,00,000 for a year.

15. A Ltd. maintain margin of safety of 37.5% with an overall contribution to sales ratio of 40%.
Its fixed costs amount to 5 lakhs.
Calculate the following:
(i) Break-even sales;
(ii) Total sales:
(iii) Total variable cost:
(iv) Current profit; and
(v) New "Margin of Safety" if the sale volume is increased by 74%.

16. An Indian soft drink company is planning to establish subsidiary company in Bhutan to
produce mineral water. Based on the estimated annual sales of 40,000 bottles of the mineral water
cost studies produced the following estimates for the Bhutanese subsidiary:
Total Annual Percentage of Total Annual Cost
Costs ₹ which is
Variable
Material 2,10,000 100%
Labour 1,50,000 80%
Factory Overhead 92,0000 60%
Administration 40,000 35%
Expenses

The Bhutanese production will be sold by manufacturer's representative who will receive a
commission of 8% of the sale price. No portion of the Indian office expenses is to be allocated to
the Bhutanese subsidiary.
You are required to
(i) Compute the sale price per bottle to enable the management to realize an estimated 10% profit
on sale proceed in Bhutan.
(ii) Calculate the break-even point in rupees sales as also in number of bottles for the Bhutanese
subsidiary on the assumption that the sale price is 14 per bottle.