# Cost Valume Profit Relationship Graphical Representation

Selling Price 700 UNITS TOTAL FIXED COST TOTAL VARIABLE COST TOTAL COST TOTAL REVENUE PROFIT
Fixed Cost 84000 0 84000 0 84000 0 -84000
Variable Cost 420 100 84000 42000 126000 70000 -56000
Capacity 8000 200 84000 84000 168000 140000 -28000
300 84000 126000 210000 210000 0
Contribution per unit (₹) 280 400 84000 168000 252000 280000 28000
P/V Ratio 0.4 500 84000 210000 294000 350000 56000
Break-even point (units) 300 600 84000 252000 336000 420000 84000
Break-even point (₹) 210000 700 84000 294000 378000 490000 112000

#
Break-even Graph
PROFIT
600000

500000 Profit
Profit
Revenue & Cost

400000

300000

200000 210000

100000
Loss
0 0 100 200 300 400 500 600 700
0 100 200 300 400 500 600 700
Unit Loss

TOTAL COST TOTAL REVENUE

Break-even Chart
600000

500000

400000

300000

200000

100000

0
0 100 200 300 400 500 600 700

TOTAL FIXED COST TOTAL VARIABLE COST TOTAL COST TOTAL REVENUE
#
PQR Ltd. manufactures and sells three different types of products namely A, B and C. The selling price per units of these products
are 200, 160 and 100 respectively. The corresponding variable cost per unit are 120, 120 and 40 while the total fixed cost are
11,60,000. The quantity wise (or sales mix) in which these products are manufactured and sold are 20%, 30% and 50%
respectively. You are required to calculate:

(i) the Overall break-even quantity

(ii) the product-wise BEP in units
(iii) Product-wise BEP (in rupee)
(iv) Overall BEP (in value)
(v) Overall P/V ratio
(vi) The predicted units of output are 10000, 15000, 20000, 25000 and 30000

# Product Selling Price Variable cost CPU Sales Mix Wtg CPU
A 200 120 80 0.2 16
B 160 120 40 0.3 12
C 100 40 60 0.5 30
Composite CPU 58

Overall BEP 20000

# Computation of productwise BEP

Product Wtg Avg SP Wtg Avg VC Wtg CPU BEP(Unit) BEP(Value)
A 40 24 16 4000 800000
B 48 36 12 6000 960000
C 50 20 30 10000 1000000
Total 138 80 58 2760000

Overall P/V Ratio 42.03%

# Predicted Cost & Revenue

Unit Fixed Cost Variable Cost Total Cost Selling Value Profit
10000 1160000 800000 1960000 1380000 -580000
15000 1160000 1200000 2360000 2070000 -290000
20000 1160000 1600000 2760000 2760000 0
25000 1160000 2000000 3160000 3450000 290000
30000 1160000 2400000 3560000 4140000 580000

Break-even Chart of PQR Ltd.

4500000
4000000
3500000
Profit
3000000
2760000
2500000
2000000
1500000
Loss
1000000
500000
0
10000 15000 20000 25000 30000

Total Cost Selling Value

# WhatIf Analysis
Case I
Selling Price 850
Units Sold 500 Selling Price 270
Revenue 425000 Units Sold 500
Variable Cost per Unit 250 Revenue 135000
Total Variable cost 125000 Variable Cost per Unit 250
Fixed Cost 10000 Total Variable cost 125000
Total Cost 135000 Fixed Cost 10000
Profit 290000 Total Cost 135000
Profit 0
# Part I
Case II Case III

Selling Price 850 Selling Price 850

Units Sold 16.66667 Units Sold 500
Revenue 14166.67 Revenue 425000
Variable Cost per Unit 250 Variable Cost per Unit 830
Total Variable cost 4166.667 Total Variable cost 415000
Fixed Cost 10000 Fixed Cost 10000
Total Cost 14166.67 Total Cost 425000
Profit 0 Profit 0

# Case IV Part 2
Qty Profit
Selling Price 850 290000
Units Sold 500 500 290000
Revenue 425000 600 350000
Variable Cost per Unit 250 700 410000
Total Variable cost 125000 800 470000
Fixed Cost 300000
Total Cost 425000
Profit 0

# Part 3
Scenario Summary
Current Values: Better worst Best
Changing Cells:
Selling Price 850 860 700 1000
Unit Sold 500 600 300 800
Variable Cost 250 280 350 200
Result Cells:
Proft 280000 165000 390000
# Given
Products P Q R
Selling Price ( ₹) 200 260 420
Raw Material (kg) 0.5 1.2 2.5
Direct Material (kg) 0.25 – –
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 Q R

Opening 600 400 400 100 50
Closing 650 260 200 300 50

# Sales Budget in Quantity

Particulars P Q R
Selling Price 200 260 420
Variable Cost:
Raw Material 100 50 120 250
Direct Material 40 10 – –
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/unit 66 14 27
Sales Mix 8 2 1
Weighted Contribution/unit 528 28 27 583

Desired Profit 120000

Addl. Fixed Overheads 200000
Desired Contribution 320000

Number of batches of P, Q and R 549

Sales Quantity P 4391
Q 1098
R 549

Sales 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 6038
Raw Material usage 0.5 1.2 2.5
Total Raw Material Required 2096 1558 1373 5026
Direct Material Usage 0.25 – –
Total Direct material required 524 – – 524

Material Purchase Budget

Particulars Raw Materials Direct Materials Total
Budgeted Usage 5026 524
Add: Closing Stock 650 260
Less: Opening Stock 600 400
Budgeted Purchase 5076 384
Price of Material 100 40
Cost of Purchase 507560 15355 522915

Direct Labour Budget

Particulars P Q R Total
Budgeted Production 4191 1298 549 6038
Skilled labour hours 4 6 8
Total Skilled Labour Required 16764 7788 4392 28944
Cost of Skilled Labour Hours 100584 46728 26352 173664
Skilled Workers required 84 39 22 145 200

Semi-skilled labour hours required 2 2 3

Total Semi-skilled labour hours required 8382 2596 1647 12625
Cost of Semi-skilled labour Hours 41910 12980 8235 63125
Semi-skilled workers required 42 13 8 63
Total Labour Cost 142494 59708 34587 236789
# The following data relates to ABC Ltd.
The financial manager has made the following sales forecast for the first 5 months of the coming year, commencing from 1 April 2023
Month Sales (₹)
April 40,000
May 45,000
June 55,000
July 60,000
August 50,000
Other data
1. Debtor's and creditor's balance at the beginning of the year are ₹ 30,000 and ₹ 14,000 respectively. The balance of other relevant assets and
(a) Cash Balance ₹ 7,500
(b) Stock ₹ 51,000
© Accrued sales commission ₹ 3,500
2. 40% sales are on cash basis. Credit sales are collected in the month following the sale.
3. Cost of sales is 60% of sales.
4. The only other variable cost is 5% commission to sales agents. The sales commission is paid in a month after it is earned.
5. Inventory is kept equal to sales requirements for the next 2 months budgted sales.
6. Trade creditors are paid in the following month after purchases.
7. Fixed costs are ₹ 5,000 per month including ₹ 2,000 depreciation.
You are required to prepare a cash budget for the month of April, May and June 2023 respectively. Also show Sales, Creditors, Total Receipts and Total

# Opening Debtors 30000

Opening Creditors 14000
Opening CashBalance 7500
Opening Stock 51000
Accrued sales Commission 3500

# Working Note:
Perticulars April May June July August
Sales 40000 45000 55000 60000 50000
Credit Sales 24000 27000 33000 36000 30000
Creditors
Cost of sales 24000 27000 33000 36000 30000 Credit & Cash Sales
Closing Inventory 60000 69000 66000
60000
Op. Inventory 51000 60000 69000
Purhases 33000 36000 30000 50000
Payments to Creditors 14000 33000 36000
40000

30000

20000
# Cash Budget
Perticulars April May June 10000
Cash Balance 7500 33000 37000
0
Add. Receipts April May June
Cash Sales 16000 18000 22000
Receipts from Debtors 30000 24000 27000 Credit Sales Cash Sales

Total Receipts 53500 75000 86000 Receipts Graph

Payment:
60000
Creditors 14000 33000 36000
Fixed cost 3000 3000 3000 50000
Commisssion 3500 2000 2250
40000
Total Payments 20500 38000 41250
Cl. Balance 33000 37000 44750 30000

20000
Creditors
40000 10000

35000 0
April May June
30000
25000 Cash Sales Receipts from Debtors

20000
15000
10000
5000
0
April May June
 Data
Validation
# The following information relates to a company: Table
At 80% Capacity 10%
Variable Cost: 20%
Direct Labour 18,000 30%
Material Cost 6,000 40%
Semi-Variable Cost 50%
Power (30% fixed and 70% variable) 40,000 60%
Repairs and maintenance (80% fixed and 20% variable) 6,000 70%
Fixed Overehads: 80%
Depreciation 11,000 90%
Insurance 5,000 100%
Salaries 10,000
Draw a flexible budget at 70% and 80% plant capacity

# Flexible Budget for the period

Periculars 90% 80%
Direct Labour 20250 18000
Material Cost 6750 6000
Variable Cost 27000 24000

Power (30% fixed and 70% variable)

Fixed 12000 12000
Variable 31500 28000
Repairs and maintenance (80% fixed and 20% variable)
Fixed 4800 4800
Variable 1350 1,200
Semi Variable Cost 49650 46000

Depreciation 11,000 11,000

Insurance 5,000 5,000
Salaries 10,000 10,000
Fixed Overhead 26,000 26,000
Total Cost 1,02,650 96,000

26,000

27000 Variable Cost

Semi Variable Cost
Fixed Overhead

49650
SOLN

PACKS 6000
INCREMENTAL APPROACH
PARTICULARS RS COSTS BENEFITS
EXPORT SALES (6000 PACKS @ RS 30) 30 180000
SAVINGS IN MAINTAINCE COST 1000
DIFFERENTIAL COST
DIRECT MATERIALS 10 60000
DIRECT LABOUR 7 42000
VARIABLE OVERHEADS
FACTORY OVERHEADS 4 24000
OFFICE AND SELLING OVERHEADS 3 18000
ADDITIONAL FIXED COST 10000
RENTAL INCOME FOREGONE 9000
163000 181000
INCREMENTAL BENEFIT 18000

TOTAL PROFIT APPROACH

OPTION 1 20000
OPTION 2 26000

PARTICULARS RS 1 2
EXPORT SALES (6000 PACKS @RS30) 30 180000
SALES IN HOME MARKET 60 1200000 1200000
RENTAL INCOME 9000 -
TOTAL REVENUE 1209000 1380000
VARIABLE COSTS
DIRECT MATERIAL 10 200000 260000
DIRECT LABOUR 7 140000 182000
FACTORY 4 80000 104000
OFFICE AND SELLING 3 60000 78000
MAINTAINCE COST 1000
FIXED COST:
FACTORY 240000 240000
OFFICE AND SELLING 120000 120000
ADDITIONAL FIXED COST 10000
TOTAL COST 841000 994000
PROFIT (TOTAL REVENUE - TOTAL COST) 368000 386000
PARTICULARS RS
DIRECT MATERIAL 160
DIRECT LABOUR 20
VAR. MANUFACTURING OVERHEAD 50
FIXED OVERHEAD 10
DEPRECIATION 10
VARIABLE SELLING OVERHEAD 5
ROYALTY 10
PROFIT 50
315
CENTRAL EXCISE DUTY 30
SELLING PRICE PER UNIT 345
[A] AIRLINES IS READY TO BUY200 SUCH POWER BANKS AT RS 250 EACH. ADVICE THE COMPANY
WHETHER THE OFFER SHOULD BE ACCEPTED OR NOT.
[B] AT WHAT PRICE THE COMPANY SHOULD SUPPLY THE POWER BANKS TO ITS SISTER CONCERNS , IF
THE POLICY OF THE COMPANY IS TRANSFFER AT COST?

SOLN

COST BENEFIT ANALYSIS OF EXPORT ORDER

PARTICULARS COST BENEFITS
OFFERED SALE PRICE 250
VARIABLE COSTS:
DIRECT MATERIAL 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