Following information is available with respect to ABC ltd.

Selling price 700

fixed cost 84000
variable cost 420
Capacity 8000
The predicted units of output are 0,100,200,300,400,500,600 and 700

cost volume profit chart

Break even point
Contribution income statement at 300 units of output

Selling price 700

fixed cost 84000
variable cost 420
Capacity 8000
Contribution Margin 280
Profit volume ratio 0.4

Table of Predicted cost and Revenue

Units Fixed cost Variable cost Total cost
0 84000 0 84000
100 84000 42000 126000
200 84000 84000 168000
300 84000 126000 210000
400 84000 168000 252000
500 84000 210000 294000
600 84000 252000 336000
700 84000 294000 378000

Break even point Fixed cost/contribution per unit

IN units 300

In rupees fixed cost/ PV ratio

210000

Income statement of ABC ltd.

Particulars Amount
Sales(300) 210000
Less: Variable cost 126000
Contribution margin 84000
Less: Fixed cost 84000
Net Income /Loss 0
Total revenue
0
70000
140000
210000
280000
350000
420000
490000
Product Selling price Variable cost(per unit) Contribution(PU) Sales mix
A 200 120 80 20%
B 160 120 40 30%
C 100 40 60 50%

Fixed cost = 1160000

Overall BE Fixed Cost/ contribution per unit 20000

Computation of Product wise BEP
Product Weighted SP Weighted VC Weighted CPU BEP(in units
A 40 24 16 4000
B 48 36 12 6000
C 50 20 30 10000
138 80 58

PV ratio Total FC/ Overall BEP 42.03%

Table of predicted cost and revenue

Units Fixed Cost Variable cost Total cost Sales value
10000 1160000 800000 1960000 1380000
15000 1160000 1200000 2360000 2070000
20000 1160000 1600000 2760000 2760000
25000 1160000 2000000 3160000 3450000
30000 1160000 2400000 3560000 4140000
Weighted CPU
16
12
30
58

BEP( in value )
800000
960000
1000000
2760000

Profit/loss
-580000
-290000
0
290000
580000
Products P Q R
Selling price 200 260 420
Raw material 0.5 1.2 2.5
Direct material 0.25 0 0
Skilled labour hours 4 6 8
Semi skilled labour hours 2 2 3
Variable overheads 40 80 80
Sales mix 8 2 1

Particulars Raw materials Direct materials P

Opening 600 400 400
Closing 650 260 200

Sales Budget in Quantity

Partculars P Q R
Selling price 200 260 420
Variable cost
Raw material 100 50 120 250
Direct material 40 10 0 0
Skilled labour 6 24 36 48
semi skilled labour 5 10 10 15
variable overhead 40 80 80
Total variable cost 134 246 393
Contribution per unit SP- TVC 66 14 27
Sales mix 8 2 1
Weghted contribution (PU) 528 28 27

Desired profit 120000

ADD: Fixed overheads 200000
Desired Countribution 320000
Number of batches 549
Sales quantity P 4391
Q 1098
R 549

Sakes budget in value

Particulars P Q R
Budgeted sales quantity 4391 1098 549
Budgeted Price 200 260 420
Budgeted sales Value 878200 285480 230580

Production Budget
Particulars P Q R Total
Budgeted Sales Quantity 4391 1098 549 6038
ADD: closing stock 200 300 50 550
Less:opening stock 400 100 50 550
Budgeted Production 4191 1298 549 6038

Raw Material usage budget

Particulars P Q R Total
Budgeted Production 4191 1298 549
Raw Material usage 0.5 1.2 2.5
Total raw material required 2096 1558 1373 5026
Direct Material usage 0.25 0 0
Total Direct material required 524 0 0 524

Material Purchase budget

Particulars Raw materials Direct materialstotal
Budgeted Usage 5025 524
Add: closing stock 650 260
Less: opening stock 600 400
Budgeted Purchase 5075 384
Price of material 100 40
Cost of purchase 507500 15360 522860

Direct Labour budet

Particulars P Q R Total
Budgeted Production 4191 1298 549 6038
Skilled labour hour 4 6 8
Total skill labour hour required 16764 7788 4392 28944
Cost of skilled labour hour 100584 46728 26352 173664
Skilled labour Required 84 39 22 145

Semi skilled labour hours 2 2 3

Total semi skilled labour hour required 8382 2596 1647 12625
Cost of semi skilled labour hour 41910 12980 8235 63125
Semi skilled labour required 42 13 8 63
Total labour cost 142494 59708 34587 236789
Q R
100 50
300 50

583
200
Opening Debtor 30000
Opening creditors 14000
Opening cash balance 7500
Opening stock balance 51000
Accrued sales commission 3500

Working notes
Particulars April May June July August
Sales 40000 45000 55000 60000 50000
Credit sales (60% of sales ) 24000 27000 33000 36000 30000
Creditors
Cost of sales (60% of sales 24000 27000 33000 36000 30000

Desired closing
inventory( addition of
next 2 month cost of
sales) 60000 69000 66000
84000 96000 99000
Less:opening inventory 51000 60000 69000
Purchases 33000 36000 30000
Payment to creditors 14000 33000 36000

Cash budget
Particulars April May June
Opening balance 7500 33000 37000
Add: Receipts
Cash sales(40%of sales) 16000 18000 22000
Received from debtors (1
month after sales
30000 24000 27000
Total Receipts 53500 75000 86000
Payments
Creditors 14000 33000 36000
Fixed cost (5000-2000) 3000 3000 3000
Sales commision (5% of
previous month sales) 3500 2000 2250
Total payments 20500 38000 41250
Closing balance 33000 37000 44750
 Flexible Budget
Particulars 70% 80%

Direct labour 15750 18000

Material cost 5250 6000
Variable cost 21000 24000

Power(30% fixed
and 70% variable 40000
Fixed 12000 12000
Variable 24500 28000

Repairs and
maintenance
(80%fixed and 20%
variable) 6000
Fixed 4800 4800
Variable 1050 1200
Semi Variable cost 42350 46000

Depriciation 11000 11000

Insurance 5000 5000
Salaries 10000 10000
Fixed overheads 26000 26000
Total Cost 89350 96000
Packs 6000
Incremental Approach
Cost Benefit analysis of Export offer
Particulars ₹ Costs Benefits
Export Sales (@30) 30 180000
Savings in maintenance cost 1000
Differential Cost
Direct Materials 10 60000
Direct labour 7 42000
Variable overheads
Factory Overheads 4 24000
Office oveheads 3 18000
Additional fixed cost 10000
Rental income foregone 9000
163000 181000
Incremental Benefit 18000

Total Profit approach

Option-1 Status quo i.e reject the offerand sell in home market
Option-2 Accept the offer and sell In both markets

Under Option 1 20000

Under Option 2 26000

Particulars ₹ I II
Export sales ( 6000 @ ₹30) 30 180000
Sales in Home market 60 1200000 1200000
Rental Income 9000
Total Revenue 1209000 1380000
Variable Cost
Direct material 10 200000 260000
Direct labour 7 140000 182000
Variable Overheads
Factory overheads 4 80000 104000
Office overheads 3 60000 78000
Maintenance Expenses 1000
Fixed Expenses
Factory 240000 240000
Office and selling 120000 120000
Additional Fixed cost 10000
Total Cost 841000 994000
Profit (Total revenue - Total Cost) 368000 386000
 Cost benefit Analysis of Export order
Particulars Cost Benefits
Offered Sales price 250
Variable Cost:
Direct Materials 160
Direct Labour 20
Variable Overheads 50
Royalty 10
Central excise duty 30
Total 270 250

(B)
Particulars Amount
Sales Price 345
Less:Profit 50
Less: Variable Selling overheads 5
Price to be quoted 290