BHAVISHA - The Commerce & Law Institute

410 – Nandanwan Nagar, Aakhaliya Circle, Chopasni Road, Jodhpur (Raj.)

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Q. 1 A factory manufacturing sewing machines has the capacity to produce

500 machines per annum. The marginal (variable) cost of each machine is Rs. 200
and each machine is sold for Rs. 250. Fixed overheads are Rs. 12,000 per annum.
Calculate the break-even points for output and sales and show what profit will result
if output is 90% of capacity ?
Q. 2 From the following data, calculate
(i) P/V Ratio.
(ii) Profit when sales are Rs. 20,000 and
(iii) New Break-even-point if selling price is reduced by 20%.
Fixed expenses Rs. 4,000
Break-even point Rs. 10,000
Q. 3 Given the following information :
Fixed Cost: Rs. 4,000
Break even Sales : Rs. 20,000
Profit = 1,000
Selling price per unit = Rs. 20
You are required to calculate :
(i) Sales and marginal cost of sales, and
(ii) New break-even point if selling price is reduced by 10%.
[B.Com. (Pass) Delhi, 1985 & 1999]
Q. 4 (a) From the following data calculate :
(i) Break-even point expressed in amount of sales in rupees.,
(ii) How many units must be sold to earn a net income of 10% of sales ?
Selling price Rs. 20 per unit
Variable Cost Rs. 12 per unit
Fixed Cost Rs. 2,40,000
Q. 5 Find out P/V Ratio if fixed Cost is Rs. 10,000 and Break-even Sales are Rs. 25,000.
Q. 6 The sales turnover and profit of M/s. A Ltd. during the two years 2012 and 2013 were
as follows :
Year Sales Profit
(Rs.) (Rs.)
2012 4,50,000 60,000
2013 5,10,000 75,000 You are required to calculate :
(i) Profit-Volume Ratio; (ii) Sales at which company will neither lose nor gain anything;
(iii) Sales required to earn a profit ofRs. 1,20,000; (iv) The profit made when sales are
Rs. 7,50,000.
Q.7 ATZ Co. Ltd. produced and sold 1,000 toys last year at a price ofRs. 500 each. The cost
structure per toy is as follows :
Rs.
Materials 100
Labour 50
Variable Overheads 25
175
Fixed Overheads 200
375
Profit 125
Price 500
Due to heavy competition, the price has to be reduced to Rs. 425 for the coming year.
Assuming that there will be no change in costs, find out how many toys shall be sold
to ensure the same amount of total profit as last year.
Q. 8 A company annually manufactures and sells 20,000 units of a product, the selling
price of which is Rs. 50 and profit earned is Rs. 10 per unit.

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 BHAVISHA - The Commerce & Law Institute
410 – Nandanwan Nagar, Aakhaliya Circle, Chopasni Road, Jodhpur (Raj.)
Contact : 0291–2760178, 9810060308, 9829524103
Web – www.bhavisha.co.in: Email : bhavisha.co.in@gmail.com

The analysis of cost of 20,000 units is :

Materials Cost Rs. 3,00,000
Labour Cost Rs. 1,00,000
Overheads Rs. 4,00,000
(50% Variable)
You are required to compute :
(i) Break-even Sales in Units and in Rupees.
(ii) Sales to earn a Profit of Rs. 3,00,000.
(iii) Profit when 15,000 units are sold.
Q. 9 The following figures are available from the records of MK Enterprises as at 31 st March,
2007 and 2008 :
2007 2008
(? lakh) (? lakh)
Sales 150 200
Profit 30 50
Calculate:
(i) The P/V Ratio and Total Fixed expenses.
(ii) The break-even level of sales.
(iii) Sales required to earn a profit ofRs. 90 lakhs.
(iii) Profit or loss that would arise if the sales were Rs. 280 lakhs.
Q.10 The following figures are available from the records of G.C. Enterprises as on 31st
March of 2011 and 2012:
2011 2012
? Lakhs ? Lakhs
Sales 150 200
Profit 30 50
Calculate:
(a) P/V ratio and total fixed expenses.
(b) Break-even level of sales.
(c) Sales required to earn a profit ofRs. 90 lakhs.
(d) Profit or loss that would arise if the sales were Rs. 280 lakhs.
Q.11 A factory engaged in manufacturing plastic buckets is working to 40% capacity and
produces 10,000 buckets per annum.
The present cost break-up for one bucket is as under :
Material Rs. 10
Labour Cost Rs. 3
Overheads 5 (60% fixed)
The selling price is Rs. 20 per bucket.
If it is decided to work the factory at 50% capacity, the selling price falls by 3%. At
90% capacity, the selling price falls by 5% accompanied by a similar fall in the prices
of material.
You are required to calculate the profit at 50% and 90% capacities and also calculate
break-even points for the same capacity productions. [B.Com. (Pass) Delhi, 2003]
Q.12 A company is intending to purchase a new plant. There are two alternative choices
available :
Plant A : The operation of this plant will result in a fixed cost ofRs. 40,000 and variable
costs ofRs. 4 per unit;
Plan/ B : The purchase of this plant will result in a fixed cost ofRs. 60,000 and variable
costs of Rs. 3 per unit.
Compute the cost break-even point and state which plant is to be preferred and when.
Q.13 Computation of Basic Data
Fill in the blanks for each of the following independent situations:

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 BHAVISHA - The Commerce & Law Institute
410 – Nandanwan Nagar, Aakhaliya Circle, Chopasni Road, Jodhpur (Raj.)
Contact : 0291–2760178, 9810060308, 9829524103
Web – www.bhavisha.co.in: Email : bhavisha.co.in@gmail.com

Situations AYE BYE CEE DEE WYE

Selling Price per unit ? (a) Rs. 50 Rs. 20 ?(g) Rs. 30
Variable Cost as % of 60 m 75 75 ?(i)
Selling Price
No. of units sold 10,000 4,000 ? (e) 6,000 5,000
Marginal Contribution Rs. Rs. ?(f) Rs. Rs.
20,000 80,000 25,000 50,000
Fixed Costs Rs. ?(d) Rs. Rs. ?G)
12,000 1,20,000 10,000
Profit / Loss ?(b) Rs. Rs. ?(h) Rs.
20,000 30,000 15,000

Q.14 Marginal Costing - Computation of PVR, BEP, etc.15 ABC Limited

started its operations in a year with a Total Production Capacity of
2,00,000 units. The following information, for two years, are made
available to you:
Year 1 Year 2
Sales (units) 80,000 1,20,000
Total Cost (Rs.) 34,40,000 45,60,000
There has been to change in the Cost Structure and Selling Price and
it is anticipated that it will remain unchanged in Year 3 also. Selling Price
is Rs. 40 per unit.
Calculated) Variable Cost p.u. (2) PV Ratio, (3) Break-Even Point (in units),
(4) Profit if the Firm operates at 75% of the capacity.
Q.15 OH Analysis and Computation of BEP
PQ Limited reports the following cost structure at two capacity
levels:
POH 2,000 units (100% 1,500 units
capacity)
Production Overhead 1 Rs. 3 per unit Rs. 4 per unit
Production Overhead II Rs. 2 per unit Rs. 2 per unit
If the Selling Price, reduced by Direct Material and Labour is Rs. 8 per
unit, what would be its Break-Even Point?
Q.16 Computation of Required Sales for Desired Profit
Product Z has a Profit-Volume Ratio of 28%. Fixed Operating Costs
directly attributable to Product Z during the Quarter II of the financial year
will be Rs. 2,80,000. Calculate the Sales Revenue required to achieve a
quarterly profit of Rs. 70,000.
Q.17 Computation of Required Sales Value, Sale Price and MOS N 07, M
08, N 12, N 16 A Company has introduced a new product and
marketed 20,000 units. Variable Cost of the product is Rs. 20 per unit
and Fixed Overheads are Rs. 3,20,000. You are required to:
1. Calculate Selling Price per unit to earn a profit of 10% on Sales
Value, BEP and Margin of Safety.
2. If the Selling Price is reduced by the Company by 10%, demand is
expected to increase by 5000 units, then what will be its impact on
Profit, BEP and Margin of Safety?
3. Calculate Margin of Safety if Profit is Rs. 64,000.

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 BHAVISHA - The Commerce & Law Institute
410 – Nandanwan Nagar, Aakhaliya Circle, Chopasni Road, Jodhpur (Raj.)
Contact : 0291–2760178, 9810060308, 9829524103
Web – www.bhavisha.co.in: Email : bhavisha.co.in@gmail.com

Q.18 Marginal Costing - PVR, BEP, MOS, etc.

Arnav Ltd manufactures and sells 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
Direct Material 30% of Cost of Goods —
Sold
Direct Labour 15% of Cost of Goods —
Sold
Factory Overhead 10% of Cost of Goods Rs. 2,30,000
Sold
General & Administration 2% of Cost of Goods Rs. 71,000
Overhead Sold
Selling & Distribution 4% of Cost of Sales Rs. 68,000
Overhead
Last Year, 5,000 units were sold at Rs.185 per unit. From the given
data find the following:
(a) Break-Even Sales (in (b) Profit earned during last year
Rupees)
(c) Margin of Safety (in %) (d) Profit if the Sales were 10% less than the
Actual Sales.

Q.19 Marginal Costing - Basic Computations

N 15 A Company gives the following information:
Margin of Rs. 3,75,000 Margin of 15,000 units
Safety Rs. 3,87,500 Safety 5,000 units
Total Cost (Quantity)
Break Even Sales in
Units
Calculate - (i) Selling Price per unit, (ii) Profit, (iii) Profit / Volume Ratio,
(iv) Break Even Sales (in Rupees), and (v) Fixed Cost.
Q.20 PVR, BEP and Basic Computations
The PV Ratio of Delta Ltd is 50% and Margin of Safety is 40%. The
Company sold 500 units for Rs. 5,00,000. Calculate –
(a) BEP, and (b) Sales in units to earn a Profit of 10% on Sales.
Q.21 Marginal Costing - BEQ, Sales, Price, etc.
The following information was obtained from the records of a manufacturing
unit (in Rs.):
Sales 80,000 units @ Rs. 25 20,00,000
Material Consumed 8,00,000
Variable Overheads 2,00,000
Labour Charges 4,00,000
Fixed Overheads 3,60,000 17,60,000
Net Profit 2,40,000
Calculate:
1. Number of Units by selling which the Company will neither lose nor gain
anything.
2. Sales needed to earn a Profit of 20% on Sales.

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 BHAVISHA - The Commerce & Law Institute
410 – Nandanwan Nagar, Aakhaliya Circle, Chopasni Road, Jodhpur (Raj.)
Contact : 0291–2760178, 9810060308, 9829524103
Web – www.bhavisha.co.in: Email : bhavisha.co.in@gmail.com

3. Extra Units to be sold to obtain the Present Profit, if it is proposed to

reduce the Selling Price by 20% and 25%.
4. Selling Price to be fixed to bring down its Break-Even Point to
10,000 Units under present conditions.
Q.22 Computation of PVR, BEP, Cash BEP, etc. N
10 MNP Ltd sold 2,75,000 units of its product at Rs. 37.50 per unit.
Variable Costs are Rs.17.50 per unit (Manufacturing Costs of Rs. 14
and Selling Costs of Rs. 3.50 per unit). Fixed Costs are incurred
uniformly throughout the year and amount to Rs. 35,00,000 (including
Depreciation of Rs. 15,00,000). There are no beginning or ending
inventories. Required -
1. Estimated Break-Even Sales Quantity and Cash Break Even Sales
Level Quantity.
2. Estimate the PV Ratio.
3. Estimate the number of units that must be sold to earn an Income
(EBIT) of Rs. 2,50,000.
4. Estimate the Sales Level to achieve an After-Tax Income (PAT) of Rs.
2,50,000. Assume 40% Corporate Income Tax Rate.

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