Example 1)

Market X (units) Y (units)

Product A:
Product
Actual for the year 5000 7000
Add: Increase of 10% & 5% for X & Y 500 350 A
Add: Increase due to advt. campaign 500 650 B
Total 6000 8000 Total

Product B:
Actual for the year 2000 4000
Add: Increase of 20% & 10% for X & Y 400 400
Add: Increase due to advt. campaign 600 600
Total 3000 5000
 Sales Budget for the Year 2024-25
Market X Market Y Total
Units Price Value Units Price Value Units Price Value
6000 10 60000 8000 10 80000 14000 10 140000
3000 40 120000 5000 40 200000 8000 40 320000
9000 180000 13000 280000 22000 460000
EXAMPLE 3)

Production Budget (units) for the h

2024 (₹)
Particulars
Oct.
Budgeted Sales 4000
Add: Closing Stock (25% of next month's sale) 1000
Total 5000
Less: Opening Stock 1000
Production 4000

Production Cost Budget

Particulars Per Unit (₹)
DM 15
DL 10
Factory o/h 5
Total 30
nits) for the half year ending 31st March, 2025
2024 (₹) 2025 (₹)
Nov. Dec. Jan. Feb. Mar.
4000 5000 5600 6000 6800
1250 1400 1500 1700 1900
5250 6400 7100 7700 8700
1000 1250 1400 1500 1700
4250 5150 5700 6200 7000

Total (₹)
484500
323000
161500
969000
, 2025
25 (₹)
For the whole half
year
31400
8750
40150
7850
32300
 Sales A (₹)
Sales at Counter 12000000
Sales by Travelling Salesmen 3000000
Total Estimated 15000000
Variable O/H:
Counter Salesmen Commission 240000
Travelling Salesmen Commissi 150000
Commission on Expenses 150000
Sales Overhead Budget Total 540000
for the quarter ending
31st December 2024 Fixed O/H:
Advertisement
Salaries of Sales Department
Expenses of Sales Department
Salaries of Counter Salesmen
Salaries of Travelling Salesmen
Total

Total Sales O/H

 B (₹) C (₹) D (₹) Total (₹)
9000000 8000000 6000000 35000000
6000000 8000000 10000000 27000000
15000000 16000000 16000000 62000000

180000 160000 120000 700000

300000 400000 500000 1350000
300000 400000 500000 1350000
780000 960000 1120000 3400000

1250000
1750000
350000
2400000
1200000
6950000

10350000
Q2) Xyz is a small enterprise that started its business 2 years ago. The company exploring to sell in the overseas market. Prese
Production & sales = 20,000 packs of A in the home market at 60/- per pack. Ideal manufacturing capacity = 6000 packs which
out for this has increased the maintenance cost by 1000 cost per pack at current capacity:

Particulars Amt.
DM 10
DL 7
Factory exp.:
Fixed 12
Variable 4

Office & selling exp.:

fixed 6
variable 3

An offer from canada to export 6000 packs at Rs. 30 under consideration. Execution of canadian order will result in an addition
cost of 10,000 over and above the variable cost. No additional selling cost is required for expost order. Further accepting the e
order is not expected to affect the selling price or qty. of Product A sold in the domestic market. You are requiered to suggest
the order should be accepted or not and show the calculations. Adopt both differential & total profit approach.

Ans) (A) Differential Cost Approach

Total packs 6000

Incremental revenue
Particulars Per unit Diff. Cost
(benefit)
Export sales 30 180000
Maintenance cost 1000
Total = 181000
Differential cost: 10 60000
DM 7 42000
DL
Factory Exp. : 4 24000
Variable
Office & Selling Expenses: 3 18000
Variable
Additional fixed cost 10,000
Opportunity Cost (vertical
income figure) 9000
Total = 163,000

Incremental benefit = 18,000

B) Total Profit Approach

Domestic 20000
International 6000

Domestic
Particulars Per unit International Market
Market
Export sales 30 180000
Sales in home market 60 1200000 1200000
ell in the overseas market. Present
ing capacity = 6000 packs which is hired

an order will result in an additional fixed

st order. Further accepting the export
et. You are requiered to suggest whether
profit approach.
 No. of units Existing Situation Selling Prices reduced
30,000 30000 5%

a)
Statement of Contribution & Profit
Particulars Cost Per unit Total
Sales 100 3000000 95
Less : Variable cost 60 1800000 60
Contribution 40 1200000 35
Fixed cost 23.33 700000
Profit 16.67 500000

(Fixed cost + desired

profit)/contribution
Required sales in units = margin 34286
Increase in units = 4286 units

b)
Required Contribution
Selling Prices reduced
10%

90
60
30

40000
10000
 Statement of Contribution
Particulars X Y Z TOTAL
Demand (in unit) 6000 4000 3000
SP (per unit) 250 200 400
Raw Material as % of sales 80% 60% 75%
Raw Material per unit @ ₹ 20 per kg 200 120 300
Labour per unit @ ₹ 16 per hr 24 40 32
Variable O/H: 6 10 8
TVC 230 170 340
Contribution pe unit 20 30 60
Fixed Cost: 36000 24000 18000 78000
[(Labour per unit/rate per hr)*O/H
rate* 40%]

Raw Material per unit required 10 6 15

Contribution per kg 2 5 4
Ranking III I II

Labour per unit required 1.5 2.5 2

Contribution per labour hr 13.33 12 30
Ranking II III I

Optimum Product Mix ( when Raw Material is key factor)

Material Required Total
Product Units
per unit (in kg) Consumption

Y 4000 6 24000
Z 3000 15 45000
X 3100 10 31000
Total 100000

Statement of Contribution & Profit

Contribution per Total
Particulars Units
unit Contribution
Y 4000 30 120000
Z 3000 60 180000
X 3100 20 62000
Total Contribution 362000
Fixed Cost 78000
Profit 284000
 Statement of Contribution and Profit
Particulars CY at 5%
No of units 30000 34285.71
Selling Price per unit 100 95
Sales 3000000 3257142.86
Variable Cost per unit 60 60
Total Variable Cost 1800000 2057142.86
Contribution per unit 40 35
Contribution 1200000 1200000
Total Fixed Cost 700000 700000
Profit 500000 500000
Variable Cost rate 60% 63%
P/V ratio 40.0% 36.84%

Required Sales FC+Profit 3257142.86

PVR

at 5% at 10%
(i) % increase 14% 33%

(ii) Particulars (₹)

No of units 48000
Selling Price per unit 85
Sales = 4080000
Variable Cost per unit 60
Total Variable Cost 2880000
Contribution per unit 25
Contribution = 1200000
Total Fixed Cost 700000
Profit = 500000
nd Profit
at 10%
40000
90
3600000
60
2400000
30
1200000
700000
500000
67%
33.33%

3600000
 CASH BUDGET FOR THE PERIOD FROM APRIL - JUNE 202
PARTICULARS APRIL MAY
(A) Opening Balance 7500 33000
(B) Receipts :
Cash sales (40% of Months' sales) 16000 18000
Collection from debtors 30000 24000
Total Receipts 46000 42000
Total Cash Available (A + B) 53500 75000
(C) Payments :
Payments to creditors 14000 33000
Sales Commission 3500 2000
Fixed Costs (5000 - 2000) 3000 3000
Total Payments 20500 38000
Balance (A + B - C) 33000 37000

Calculation of Purchases and Payments to Creditors

Particulars April May
Closing Stock (60% of sales of next 2
months cost of sales) 60000
Cost of sales of current month's sales 24000
Total 84000
Opening Stock 51000
Purchases 33000
Payments to creditors (1 month lag)
ROM APRIL - JUNE 2025 April May June
Sales
FOR WHOLE
JUNE QUARTER
40,000 45,000 55,000

37000 7500

22000 56000
27000 81000
49000 137000
86000 144500

0
2250
3000
5250
80750

reditors
June
PQR Ltd. Manufactures and sells three different types of products namely A,B and C. The selling price per units of these produ
₹120, ₹120 and ₹40 while the total fixed cost are ₹11,60,000. The quantity wise (or sales mix) in which these products are m
the following :
(i) the Overall Break-even Quantity
(ii) the Product wise BEP in units
(iii) Product wise BEP (in ₹)
(iv) Overall BEP (in value)
(v) Overall P/V Ratio
(vi) the Predicted units of output are 10000, 15000, 20000, 25000 and 30000
(vii) Graphically show the Overall BEP & P/V chart.

ANS.)
(i) (i) Overall BEP
Weighted
Product SP VC CPU Sales Mix
CPU
A 200 120 80 20% 16
B 160 120 40 30% 12
C 100 40 60 50% 30
58

(ii) (ii) Product wise BEP

Weighted Weighted Weighted BEP (in BEP (in
Product Avg. SP Avg. VC Avg. CPU units) values)
A 40 24 16 4000 800000
B 48 36 12 6000 960000
C 50 20 30 10000 1000000
138 80 58 20000 2760000
g price per units of these products are ₹200, ₹160 and ₹100 respectively. The corresponding variable cost per unit are
n which these products are manufactures and sold are 20%, 30% and 50% respectively. You are required to calculate
the following :

Fixed cost = 1160000

(i) Overall BEP = 20000