Statement of Cost of Production and Profit

Month last 2 monthNext 6 montLast 4 montfull year

Capacity 0.6 0.75 0.8 0.7416667
Production/Sales 12000 45000 32000 89000
Material 96000 360000 256000 712000
Labour 112000 360000 256000 728000
Variable Overheads 36000 135000 96000 267000
Total Variable Cost 244000 855000 608000 1707000
SemiVariable Cost 60000
Fixed Cost 168750
Total Cost 1935750
Add: Profit 645250
Sales 2581000
Selling Price 29
 Statement of Marginal Cost (Per Pair of Boxing Glove)

Particulars Five Years Ago (Rs.) Now (Rs.)

Selling Price (Sp.u.) 28 ?

Direct Material 3.3 6.45
Direct Labour 3.5 4.5
Variable Overheads 10 13
Variable Cost per pair 16.8 23.95
Contribution (Cp.u.) 11.2
P/V Ratio Cp.u./Sp.u. 40%
Fixed Cost (FC) 18000 22500
BEP(units) FC/Cp.u. 1607.1429
Or Say 1607 1607

Calculation of Current Selling Price to break even at 1607 units

ContributionFC/BEP(units) 14.001245
Or Say 14
RecommendCp.u.+VCp.u. 37.95

Present New
Selling Price 28 37.95
Direct Mater 3.3 6.45
Direct Labo 3.5 4.5
Variable Ov 10 13
Variable Cos 16.8 23.95
Contribution 11.2 14
Units 1607.1429 1607.1429
Total Contri 18000 22500
Fixed Cost 18000 22500
Profit 0 0
P/v ratio 40 36.890646
 Statement of Profit
Particulars Period I Period II Change
Sales 250000 300000 50000
Less: Total Cost 200000 230000 30000
Profit 50000 70000 20000

Profit-volumChange in Profit/Change in Sales 0.4

Or 0.4

Fixed Cost 50000

Or 50000

Break Even Point(Rs.) 125000

Margin of S(AS-BES)/AS× 100 Period I 0.5

Period II 0.583333

Sales required to earn a profit of Rs. 1,00,000

Desired Profit (DP) Rs. 100000

Required Sal(FC + DP)/PV ratio 375000
(i)
Profit at a Sales level of Rs. 4,00,000
Given Sales (Rs.) 400000
(ii) Profit (Rs.) Given Sales (Rs.)× PV ratio – FC 110000
Working: Computation of Material and Labour Cost using information at 90% Capacity
Rs.
Sales 1500000
Less Profit 150000
Total Cost 1350000
Less: All cost other than material & Labour
Fixed Expenses 300500
Semi-fixed expenses 97500
Variable expenses 145000 543000
Material & Labour 807000

Statement Showing Differential Cost of 1,500 Units

Material & Labour 89666.667
Fixed Expenses 100
Semi-fixed expenses 3000
Variable expenses 4500
Differential Cost 97266.667
Minimum Export Price 65

Segregation of Semi Fixed Expenses

90% 100% per unit
Units 13500 15000
Semi Fix 97500 100500
Variable component 2
Fixed Component 70500

Segregation of Variable Expenses

90% 100% per unit
Units 13500 15000
Semi Fix 145000 149500
Variable component 3
Fixed Component 104500

Segregation of Fixed Expenses

90% 100% per unit
Units 13500 15000
Semi Fix 300500 300600
Variable component 0.0666667
Fixed Component 299600

Material and Labour Cost per uni 60

Total Variable Cost per unit 65

Minimum Price to be quoted
 Statement of given Contribution and Profit
Sales (Units)
Particulars Per Unit (Rs. 20000
Sales 40 Total(Rs.)
Less: Variable 28 800000 20000*40
Contribution 12 560000 20000*28
Less: Fixed Cost 240000 20000*12 24000/20000
Profit 180000
60000
Variable Cost rVariable Cost/ Sales 0.7 or 0.7

Profit Volume Contriburion/Sales 0.3 or 0.3

Break Even PoiFixed Cost/Cp.u 15000

Break Even PoiFixed Cost/PV Ratio 600000

Sales to earn a profit of Rs. 1,20,000

Desired Profit (DP) Rs. 120000
Required Sales(FC + DP)/Cp.u. 25000
Required Sales(FC + DP)/PV ratio 1000000

Sales to earn a profit of 10% of Sales

Per Unit (Rs.)
Selling Price 40
(i) Less: Variable Cost 28
Contribution P.U. 12
(ii) Contribution P.U. towards 4
Contribution P.U. towards 8
(iii) Fixed Cost (Rs.) 180000
Required Sales (Units) 22500
Required Sales (in rupees) 900000
(iv)
Profit at a Sales level of Rs.12,00,000
Given Sales (Rs.) 1200000
Profit Given Sales (Rs.)× PV ratio – FC 180000
(v) Profit at a Sales level of 36000 units
Given Sales (units) 36000
Profit Given Sales (units) × Cp.u. – FC 252000
2021 q3(a) Statement of Contribution
Product
Expected X Y Z
Raw
Demand
material 6000 4000 3000
(units)
cost as % 80% 60% 75%
of Sales Rs. Rs. Rs.
Value
Selling
price (SP) 250 200 400
Direct
Variable
material
cost
Directper
@Rs.20 p. 200 120 300
unit:
labour @
kg.16 per
Rs 24 40 32
Total
Variable
hour 6 10 8
variable
overheads
cost per 230 170 340
Contributio
unit
Material
n per unit 20 30 60
required
Contributio 10 6 15
Ranking
Labour
p.u. (Kg.)
n per Kg. of
(Contributi 2 5 4
hours
material
on per
requiredKg. III I II
of
Contributio
per unit 1.5 2.5 2
material
n per )
(Labour
labour 13.333333 12 30
cost /
Ranking
hour
Rs.16) II III I
(based on
Fixed Cost 36000 24000 18000
contributio
(i) When
n per raw material is key factor : Total raw
material Available = 1,00,000 kg. Optimum
Product Mix will be
Ranking of Units Material Total
products(
Y 4000 required 6 material
24000
as per p.u. (Kg.) consumpti
ZContributi 3000 15 on (Kg.)
45000
X 3100 10 31000
Total 100000

Statement of Contribution and Profit

Product Units Cp.u (Rs.) Total(Rs.)
Y 4000 30 120000
Z 3000 60 180000
X 3100 20 62000
Total Contribution 362000
Less; Fixed Cost 78000
 Profit 284000
(ii) When labour time is key factor Labour hours
Available = 18,400; Optimum Product Mix will
be:
Ranking of Units Labour Total
products(
Z 3000 hours 2 labour6000
as per required hours
X
Contributi 6000 p.u. 1.5 consumed
9000
Y 1360 2.5 3400
Total 18400

Statement of Contribution and Profit

Product Units Cp.u (Rs.) Total(Rs.)
Z 3000 60 180000
X 6000 20 120000
Y 1360 30 40800
Total Contribution 340800
Less; Fixed Cost #ERROR!
Product Units Cp.u (Rs.) Total(Rs.)
Answer 5 Statement of Contribution and Profit

Factory A B consolidatedAt 75 %
Capacity (%) 100 1 100 75
Rs.Lakhs Rs.Lakhs Rs.Lakhs Rs.Lakhs
Sales 300 200 500 375
Variable cos 220 150 370 277.5
Contributio 80 50 130 97.5
Fixed Cost 60 60
Profit 70 37.5
P/V Ratio = C/S 0.26
Or 0.26
(i) The capacity of the merged plant for the purpose of break-even
BEP(Rs)= FC/Profit volume ratio 230.76923 Lakh

(ii) The profit on working at 75% of the merged capacity.

Profit = Given Sales (Rs.) × P/V ratio 37.5
 Statement of Contribution and Profit (without Special Offer)

Year Last Year Current Year

Capacity 60% 60%

No. of Units 60000 60000
Selling Price 150 150
Variable Cost p.u.:
Direct Materials 40 42
Direct labour 10 12
Works overheads 25 25
Sales overhead 5 5
Variable Cost p.u. 80 84
Contribution p.u. 70 66
Total Contribution 4200000 3960000
Fixed Cost:
Works overheads 1500000 1650000
Sales overhead 900000 990000
Total Fixed Overhead 2400000 2640000
Profit 1800000 1320000

Calculation of additional contribution / profit to be earned from special offer :

Desired Profit 1740000

Less: Estimated Profit 1320000
Additional Profit to be earned from special offer 420000
Additional Units 20000
Additional Cp.u. = Additional contribution/ 21
Recommended Selling Price(Rs.) = Cp.u.+VCp.u 105

Alternate Solution by Goal Seek

Year Last Year Current Year
Capacity 60% 60% 20%
No. of Units 60000 60000 20000
Selling Price 150 150 105 final goal
Direct Mater 40 42 42
Direct labour 10 12 12
Works 25 25 25
overheads
Sales 5 5 5
overhead
Variable Cos 80 84 84
Contribution 70 66 21
Total Contri 4200000 3960000 420000
Fixed Cost:
Works 1500000 1650000 0
overheads
Sales 900000 990000 0
overhead
Total Fixed 2400000 2640000 0
Profit 1800000 1320000 420000
Desired Profit 1740000
Remaining Profit 420000
 Statement of Contribution and Profit
When selling price is
(i) Existing reduced by
5% 10%
No. of units
30,000 ? ?
sold
Per unit Per unit Per unit
Total (Rs.)
(Rs.) (Rs.) (Rs.)
Sales 100 3000000 95 90
Less: 60 1800000 60 60
Variable
Contribution 40 1200000 35 30
cost
Less: Fixed
700000
cost
Profit 500000

(a) When selling price is reduced by 5%

Required Sales (units) (FC+DP)/Cp.u 34285.714
or say 34286
Increase in units 4,286
(b) When selling price is reduced by 10%
Required Sales (units)= (FC+DP)/Cp.u 40000
Increase in units = 10,000
(ii) Required contribution = . Sales (units) × Cp.u
Cp.u. = Required contribution/ Sales 25
Selling Price(Rs.) = Cp.u.+VCp.u 85
Assumption: It is assumed that fixed cost will remain same during the next year also.
Alternate Solution By Using Goal Seek
Proposal to reduce SP Proposed
Current by 5 percenby 10 percent
Selling price 100 95 90 85
Variable Cos 60 60 60 60
Contributio 40 35 30 25
Units 30000 34285.714 40000 48000
Total Contri 1200000 1200000 1200000 1200000
Fixed Cost 700000 700000 700000 700000
Profit 500000 500000 500000 500000
Increase in Units 4285.7143 10000
Product A B C
Sales Value 0.4 0.35 0.25
Per Unit(Rs.Total(Rs.) Per Unit(Rs.Total(Rs.) Per Unit(Rs.)
Sales 20 200000 25 175000 20
Less: Variable Cost 10 100000 15 105000 12
Contribution 10 100000 10 70000 8
Less: Fixed Cost
Profit

Overall P/V Ratio= Overall Contribution/Overall Sale 0.44

Overall BEP(Rs.)= Fixed Cost/Overall PV Ratio 250000

breakeven products individual sale Rs.2,50,000

Rs. Units
A 100000 5000
B 87500 3500
C 62500 3125
Statement of contribution and profit (when product C is substituted by D)

Product A B D Total Total(Rs.)

Sales Value 0.5 0.3 0.2 1 500000
Per Unit(Rs.Total(Rs.) Per Unit(Rs.Total(Rs.) Per Unit(Rs.Total(Rs.) Overall
Sales 20 250000 25 150000 25 125000 500000
Less: Variable Cost 10 125000 15 90000 12.5 75000 280000
Contribution 10 125000 10 60000 12.5 50000 220000
Less: Fixed Cost 110000
Profit 110000

Overall P/V Ratio= Overall Contribution/Overall Sale 0.47

Overall BEP(Rs.)= Fixed Cost/Overall PV Ratio 300000

Share of sales of individual products in overall Break-Even Sales of Rs.3,00 Total Total(Rs.)
Rs. Units 1 500000
A 150000 7500 Total(Rs.) Overall 31000
B 90000 3600 100000 500000 -31000
C 60000 2400 50000 265000 141000
50000 235000 94000