Problems on Marginal Costing:
1. The following is the data given:
Fixed Cost = Rs. 12,000
Selling price = Rs. 12 per unit
Variable Cost = Rs. 9 per unit
What will be the amount of sales if it is desired to earn a profit of (a) Rs. 6,000
(b) Rs. 15,000
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2. What is the actual sales?
Fixed cost Rs. 8,000
Profit earned Rs. 2,000
Break even sales Rs. 40,000
3. Selling price Rs. 150 per unit
Variable cost Rs. 90 per unit
Fixed cost Rs. 6,00,000
What is the BEP?
What is the selling price per unit if BEP is 12,000 units?
4. The following information is given:
Sales Rs. 2,00,000
Variable Cost Rs. 1,20,000
Fixed Cost Rs. 30,000
Calculate (a) BEP
(b) New BEP if SP is reduced by 10%
(c)New BEP if VC increases by 10%
(d) New BEP if fixed cost increases by 10%
5. From the following, find out the SP 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
SP per unit Rs. 100
6. You are given the following data:
Fixed expenses Rs. 4,000
BEP Rs. 10,000
Calculate: (a) P/V Ratio
(b) Profit when sales are Rs. 20,000
(c)New BEP if selling price is reduced by 20%
7. Calculate margin of safety in each of the following independent situations:
(a) BEP 40%, Actual sales Rs. 40,000
(b) Actual sales – 40,000 units; BEP 25,000 units
(c) BEP – 75%
(d) P/V ratio 40%, Profit Rs. 35,000
(e) Contribution per unit Rs. 20, Profit Rs. 15,000
8. The P/V Ratio of Escorts Ltd, is 50% and the M/S is 40%. You are required to workout
the net profit and the BEP, if sales volume is Rs. 10,00,000.
9. Short questions:
(i) M/S 60%, FC Rs. 2,10,000; Variable cost ratio to sales 70%. Determine the
amount of actual sales.
(ii) BEP Rs. 40,000, FC Rs. 15.000. What is P/v Ratio?
(iii) FC Rs. 12,000; Actual sales Rs. 48,000, M/S Rs. 8,000. What is P/V Ratio?
(iv) Find out BEP when P/V Ratio is 40%, Margin of safety 30%, Profit Rs. 12,000
(v) BEP occurs at 60% of capacity sales and P/V Ratio is 30%. What is the amount
of sales when fixed cost is Rs. 1,80,000. Also find out the amount of profit at
72% capacity of sales.
(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 BEP.
(vii) Calculate the amount of actual sales when profit Rs. 20,000, BEP Rs. 50,000
and FC Rs. 25,000
(viii) Variable cost is 80% of sales and M/S is 40%. What is the amount of fixed cost
if sales are Rs. 2,00,000.
10. A company produces single product which sells for Rs. 20 per unit. Variable cost is Rs.
15 per unit and fixed overhead for the year is Rs. 6,30,000.
Calculate (i) Sales value needed to earn a profit of 10% on sales
(ii) Calculate sales price per unit to bring BEP down to 1,20,000 units
(iii) Calculate M/S sales if profit is Rs. 60,000
11. From the following data calculate the BEP.
Direct material per unit Rs. 3
Direct labour per unit Rs. 2
Fixed overhead(Total) Rs. 10,000
Variable overhead 100% on direct labour
SP per unit Rs. 10
Trade discount 5%
Also determine the net profits, if sales are 10% above the BEP.
12. The variable cost structure of a product manufactured by a company during the current
year is as under:
Material Rs. 120 per unit
Labour Rs. 30 per unit
Overheads Rs. 12 per unit
The selling price per unit is Rs. 270 and the fixed cost and sales during the current year
are Rs. 14 lakhs and Rs. 40.50 lakhs respectively.
During the forth coming year, the direct workers will be entitled to a wage increase of
10% from the beginning of the year and the material cost, variable overhead and fixed
overhead are expected to increase by 7.5%, 5% and 3% respectively.
The following are required to be computed:
(i) New sale price in the forthcoming year if the current P/V Ratio is to be
maintained
(ii) Number of units that would require to be sold during the forthcoming year, so
as to yield the same amount of profit in the current year, assuming that selling
price per unit will not be increased.
13. ABC Ltd. Manufactures three products P, Q and R. The unit selling prices of these
products are Rs. 100, Rs. 80 and Rs. 50 respectively. The corresponding unit variable
costs are Rs. 50, Rs. 40 and Rs. 20. The proportions in which these products are
manufactured and sold are 20%, 30% and 50% respectively. The total fixed costs are
Rs. 14,80,000.
Given the above information, you are required to work out the over-all break-even
quantity and the product wise break up of such quantity.
14. A, B and C are three similar plants under the same management who want them to be
merged for better operation. The details are as under:
Plant A B C
Capacity operated 100% 70% 50%
Rs. (in lakhs) Rs. (in lakhs) Rs. (in lakhs)
Turnover 300 280 150
Variable cost 200 210 75
Fixed cost 70 50 62
Find out:
(i) The capacity of the merged plant for break-even
(ii) The profit at 75% capacity of the merged plant
(iii) The turnover from the merged plant to give a profit of Rs. 28 lakhs
