Marginal Costing

MARGINAL COSTING Sky

Q.1. Compute P/V ratio in the following cases :

a) S.P. Per unit = ₹ 18
S 18
Variable cost per unit = ₹ 12
P
-
gy10
.
.

(1VC (12) .

-
b) Total sale of 1,000 units = ₹ 60.000
33 33 %
G = .

Contr

Variable cost = ₹ 45 per unit salel =

pluRatio
= 60 00 0
15k .

x100 =

- ↑
HV C
. (45 000) .
60k
c) Total sales = ₹ 5,00,000
.

15000 25 = %
Conte
Fixed costs ₹ 1,00,000- -

-
Capital invested ₹ 7,50,000
Desired profit 20% of capital employed
-

d)
- First Year (₹) Second Year (₹)
Sales 80,000 90,000
- in Sale 10 000
Profits 10,000 14,000
- - = .

- in
Profit = 1000

Q.2. P/V ratio of a firm is 40%, what are the various conclusions you can draw.

We Q.3. Calculate B.E.P in units and in value if variable cost per unit ₹ 12 selling price per
unit ₹ 18, fixed expenses ₹ 60,000.
·

N
T

Q.4. Calculate B.E.P. in units from the following:

Fixed Expenses :
Depreciation ₹ 1,00,000
Salaries ₹ 1,00,000
Variable Expenses :
Material ₹ 3 per unit
Labour ₹ 2 per unit
Selling price ₹ 10 per unit
Also calculate new B.E.P. (in value) if the selling price is reduced by 10%

Q.5. Fixed expenses ₹ 3,00,000

Variable cost per unit ₹ 75
Selling price per unit ₹ 100
Calculate:
(i) Β.Ε.Ρ.
(ii) Selling price per unit if B.E.P. is brought down to 10,000 units.

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 B G P
. . . = F C
.
.
- 180000
Sale = 400 , 000
PIVRatio 37 5 % .

HIV C
.
. = 250000

Contr 150000 => 480000

Q.6. Sales ₹ 4,00,000 Extra sales in order to BeP

:100
37nY
pluRatio =

Fixed cost ₹ 1,80,000 =

480000 - 400 , 000

Date Variable cost ₹ 2,50,000

Compute the incremental amount of sales in order to break-even.
= 80 000 .

Fi
salel 100 %
-

Q.7. Fixed cost ₹ 8,000, Profit ₹ 2,000, B.E.P.₹ 40,000. Find actual sales.
1-1 V C
. .
80 % = 8000

W
40 000
.

Contr .
20 % 10 . 000 pluRatio
D S
. 8000 + 2000 HF - C 8000 8000
.
=

DIV Rutio
.

=
20%

Profit 2000 40 000

Q.8. A company sell four products A, B, C and D

250 000
.

= .

= 0 . 2

Total sales are ₹ 60,000 which is divided in A, B, C and D in 33 1/3%, 41 2/3%, 16 2/3% o

and 8 1/3% respectively. Variable cost are 60%, 68%, 80% and 40% of selling price of
A, B, C and D respectively. Fixed cost ₹ 14,700. Calculate composite B.E.P.

Q.9.
Product S.P. Per V.C. Per % of Rupees
Units ₹ Units ₹ Sale Volume
X 4 3 20
Y 5 4 40
Z 8 6 40

Capacity : ₹ 15,00,000 total sales volume

Annual fixed cost ₹ 2,30,000.
Find : (i) Composite B.E.P. (in value)
(ii) Profit at 80% of capacity.

Q.10. M Ltd. Manufactures three products P, Q and R. The unit selling prices of these
products are ₹ 100; ₹ 80 and ₹ 50 respectively. The corresponding unit variable costs
are ₹ 50, ₹ 40 and ₹ 20. The proportions (quantity-wise) in which these products are
manufactured and sold are 20%, 30% and 50% respectively. Total fixed costs are
₹ 14,80,000.

Given the above information, you are required to work out the overall break-even
quantity and the product-wise break-up of such quantity.

Q.11. Fixed costs ₹ 4,500,

g Total variable costs ₹ 7,500
Sales = ₹ 15,000.
Calculate (i) Margin of Safety; (ii) M.S. Ratio (percentage).

Q.12 M.S. 40%, Β.Ε.Ρ. ₹ 48,000

Fixed cost ₹ 15,000: Profit ₹ 10,000
Compute P/V ratio with and without using M.S. Ratio.

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 =100 >
-
B ESO ElOU
S .
p .

Q.13. Sales ₹ 6,00,000 #

E.
-

Variable costs ₹ 3,75,000, Fixed cost ₹ 1,80,000 plupatio

60 %

Calculate sales to earn profit of ₹ 1,20,000.

on

·name Q.14. Sales are 200 units at ₹ 10 per unit. Fixed overheads ₹ 300, Variable cost ₹ 6 per
unit. There is a proposal to reduce selling price by 10%. Calculate present and future
P/V ratio and find units to be sold in future to maintain present profit.

Wi
* Q.15. A company has a P/V ratio of 40%. By what percentage must sales quantity be
·

N D
--increased to off set 15% reduction in selling price.

Q.16 Selling price per unit ₹ 20

Variable cost per unit ₹ 14
Fixed cost ₹ 7,92,000 -

Required :
(i) B.E.P.; (ii) Number of unit to be sold for a profit of ₹ 60,000; (iii) Number of units
to be sold to earn a profit of 10% of sales.

Q.17. Fixed expenses ₹ 4,000 and B.E.P.₹ 10,000

Calculate
(i) P/V ratio: (ii) Profit when sales are ₹ 20,000;
(ii) Sales for profit of ₹ 20,000: (iv) New B.E.P., if selling price is reduced by 20%,
-

Q.18. Fixed Cost ₹ 1,80,000

Variable Cost = ₹ 2 per unit
Selling Price = ₹ 20 per unit-

Calculate (i) B.E.P. (in value); (ii) Sales for a profit of ₹ 36,000;
*
(ii) M.S. if company is earning profit of ₹ 36,000.

Income statement
How Q.19.
.

-- Year
2011 2012
Sales (₹) 8,10,000 10,26,000
Profit (₹) 21,600 64,800

Calculate : (i) P/V ratio: (ii) Fixed cost (it remains same in both the years); (iii) Profit when
sales are ₹ 6,48,000; (iv) Sales to earn profit of ₹ 1,08,000; (v) M.S. if the company earns
profit of ₹ 1,08,000.

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da Question HW
Q.20. LB
h - -

Sales 4,000 units @ ₹ 25 per unit 1,00,000

On Material consumed v 40,000 -

Sip 22n C 70 000 -=

.
= ,

Variable overheads 10,000

-

v C
An C/Unit 70 000
. .:
- : .

Labour Contr 7 n 4000m 20,000

.
.
u

Fixed overheads Elin 18,000 88,000 =

PIVRatio BOY = .

Net Profit 12,000 -

800099903999
BSP
Calculate:
unite
BSP 18000
n
: =

7 .

1. Β.Ε.Ρ.-
- Ev
Units
60 000 = 2400 = .

2. Units to be sold for profit of 20% on sales.

7
3. Extra units to be sold to maintain the profit if selling price is reduced by 25%
4. Selling price per unit if B.E.P. Is brought down to 500 units
D S
.
.
= 18000 + D .
P
.

(inuning Contr unis

. nx
2 = 18000
x 18000 + 20% ON [25x]
E
=
m
= 18000
7 5
.
:

2 A -

7 nx) = 18000 + 52

Q.21. A Coaching centre decides to conduct a test for which ₹ 100 is charged from each
.

participant. The cost incurred in connection with paper checking is ₹ 60 per participant.
Also, a supervisor is appointed who is paid ₹ 400 for this job. He is supposed to
supervise maximum number of 100 students. Compute break-even number of
participants if fixed cost is ₹ 40,000.

Q.22. P/V Ratio is 50% M/S ratio is 40% and sales are ₹ 50 lakhs. Compute B.E.P. and
net profit.

Q.23. The executive of B Co., a small manufacturer of one product are developing the
annual profit plan. They are concerned with the ₹ 1,10,000 indicated profit on a sales
volume of 20.000 units. The fixed cost structure of ₹ 9,90,000 appears to be high and
they have some doubts about departing from the units sales price of ₹ 100. There is a
general agreement that the profit target should be ₹ 2,20,000.

You are required to compute:

(a) The break-even point in rupees and in units and the number of units that would have
to be sold to earn the target profit.
(b) You are also required to respond directly to each of the following two alternatives
under consideration by the management.

Alternative 1 : A sale price increase of 20% is contemplated, the sales executive

estimates that this will cause a drop units that can be sold by 15%. What would be the
new break-even point in rupees and in units ? What would be the new profit figure? How
many units would have to be sold to earn target profit ?

Alternative 2 : A decrease in fixed costs of ₹ 55,000 and a decrease of variable costs

of 6% are contemplated. What would be the new BEP in rupees ? How many units must
be sold to earn the target profit ?

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