MARGINAL COSTING
1. From the following information find out the contribution, profit and PVR.
Particulars Amount
Sales 50000
Direct Materials 20000
Direct Labour 10000
Direct Expenses 2000
Variable Overheads 3000
Fixed Overheads 5000
Statement of Marginal Cost
Particulars Amount Amount
Sales 50000
Less:
Variable Overhead 3000
Direct Labour 10000
Direct Material 20000
Direct Expenses 2000
35000
Contribution 15000
Less: Fixed Overhead 5000
Profit 10000
PVR = Contribution * 100
Sales
15000 * 100
50000
= 30%
2. From the following information calculate BEP in units and value, and also find profit
earned by preparing marginal cost statement.
Particulars Amount
Sales (20000 units @ Rs 20 per unit) 400000
Variable cost (20000 units at Rs 9 per 180000
unit)
Fixed expenses 110000
Statement of Marginal Cost
Particulars Amount
Sales (20000*20) 400000
Less: Variable Cost 180000
Contribution 220000
Less: Fixed expenses 110000
Profit 110000
BEP in Units: Fixed Cost
Contribution per unit
Contribution per unit = Selling price per unit – Variable cost per unit
20 – 9
= 11
BEP = 110000 Therefore BEP = 10000 Units.
11
BEP in Value = BEP in units * Selling price per unit
= 10000 * 20
= 200000.
3. From the following information compute:
a) BEP in units and value
b) Selling price per unit if BEP is brought down to 8000 units.
Particulars Amount
Selling price per unit 150
Variable cost per unit 90
Fixed cost 600000
a) BEP in units = 600000
60
Therefore, BEP = 10000 units.
Contribution per unit = 150 – 90 = 60.
b) Selling price per unit when BEP is brought down to 8000 units.
Contribution per unit = Fixed cost
BEP in units
= 600000
8000
= 75
Selling price per unit = Variable cost per unit + Contribution per unit
= 90 + 75
= 165.
4. From the following information estimate profit and BEP in units and value and also find
out the selling price per unit when BEP is
a) 12000 units
b) 8000 units.
Particulars Amount
Production 40000 units
Sales value 800000
Variable cost per Rs 10
unit
Fixed cost 200000
Statement of Marginal Cost
Particulars Amount
Sales 800000
Less: Variable Cost 400000
(40000*10)
Contribution 400000
Less: Fixed expenses 200000
Profit 200000
BEP in Units = 200000
10
= 20000
BEP in value = 20000 * 20 = 400000
a) Contribution per unit = 200000
12000
= 16.67
Selling price per unit = 10 + 16.67
= 26.67
b) Contribution per unit = 200000
8000
= 25
Selling price per unit = 10 + 25
= 35
5. From the following information find out:
a) Profit earned
b) BEP in units and value
c) Sales in units and value required to earn a profit of Rs 200000.
d) Profit when 280000 units are sold at Rs 17 per unit.
Particulars Amount
Selling price Rs 15 per unit
Fixed Expenses Rs 750000
Variable Expenses Rs 11 per unit
Units produced 300000
a. Statement of Marginal Cost
Particulars Amount
Sales (300000*15) 4500000
Less: Variable Cost 3300000
(300000*11) 1200000
Contribution 750000
Less: Fixed expenses 450000
Profit
b. BEP in Units = 750000
4
= 187500
BEP in value = 187500 * 15 = 2812500
Sales at a desired profit = Fixed Cost + Desired Profit * 100
Contribution per unit
= 750000+200000 *100
4
= 237500.
c. Sales at value = Sales in units * Selling price per unit
= 237500 * 15
= 3562500
d. Statement of Marginal cost
Particulars Amount
Sales (280000*17) 4760000
Less: Variable Cost 3080000
(280000*11) 1680000
Contribution 750000
Less: Fixed expenses 930000
Profit
6. The sales and profit of a company for the year 2019 and 2020 are as follows:
Year Sales Profit
2019 2000000 200000
2020 3000000 400000
Calculate PVR, BEP and sales required to earn a profit of Rs 500000.
PVR = Change in profit * 100
Change in sales
200000 *100
1000000
= 20%
BEP = Fixed cost * 100
PVR
Fixed cost = Sales * PVR – Profit
= 2000000 * .20 – 200000
= 400000 – 200000
Therefore, Fixed cost = 200000
BEP = 200000 * 100
20
Therefore, BEP = 1000000.
Sales at a desired profit = Fixed Cost + Desired Profit * 100
Contribution per unit
= 200000+500000 *100
20
= 3500000.
7. The reliable battery co-efficient has the following information:
Particulars First half year Second half year
Sales 810000 1026000
Profit 21600 64800
From the above information calculate:
PVR
Fixed cost
BEP
Amount of profit or loss when the sale is Rs 648000
Amount of sales when profit is Rs 108000
Margin of safety.
PVR = 20%
Fixed cost = 140400
BEP = 702000
Loss = 10800
Sales = Profit + Fixed Cost
PVR
= 108000 + 140400
.20
= 1242000
MOS: Profit * 100
PVR
First Half Year = 108000
Second Half Year = 324000
8. Sneha company has prepared the following budget for the year 2019 – 2020.
Sales (Units) – 15000
Fixed Expense – 34000
Sales Value – 150000
Variable cost – 6 per unit.
Find out:
PVR, BEP and MOS.
Calculate the revised PVR and BEP in each of the following case:
Decrease of 10% in selling price
Increase of 10% in variable cost
Increase of sales volume by 2000 units
Increase of Rs 6000 in fixed cost.
PVR = 40%
BEP = 85000
MOS = 65000
Decrease of 10% in selling price
PVR = 33.33% BEP = 102010
Increase of 10% in variable cost
PVR = 34 BEP = 100000
Increase in sales volume by 2000 units
PVR = 40% BEP = 85000
Increase of Rs 6000 in fixed cost
PVR = 40% BEP = 100000
