SR Ltd. produces and sells a product.

Due to severe competition, the company proposes to reduce t

current year’s operations:
Sales (30,000 units × 100) Rs. 30,00,000
Variable costs Rs. 18,00,000
Fixed costs Rs. 7,00,000
Total cost Rs. 25,00,000
Profit Rs. 5,00,000
(i) Find out the increase in number of units to be sold if selling price is reduced by (a) 5% and (b) 10
(ii) If company decides to sell 48,000 units in the next year to out-place the competitors, find out th
existing level of profit.

Solve By Using Goal Seek

SOLUTION-

PARTICULARS AMOUNT
SALES 3000000
LESS: VARIABLE COST 1800000
CONTRIBUTION 1200000
LESS:FIXED COST 700000
PROFIT 500000

i) WHEN SELLING PRICE IS REDUCED BY 5%

NEW SELLING PRICE 95

PARTICULARS AMOUNT
SALES 3257143
LESS: VARIABLE COST 2057143
CONTRIBUTION 1200000
LESS:FIXED COST 700000
PROFIT 500000

ii) WHEN SELLING PRICE IS REDUCED BY 10%

NEW SELLING PRICE 90
PARTICULARS AMOUNT
SALES 3600000
LESS:VARIABLE COST 2400000
CONTRIBUTION 1200000
LESS:FIXED COST 700000
PROFIT 500000

iii) WHEN NUMBER OF UNITS PLANNED BY COMPANY TO BE SOLD NEXT YEAR IS

48000 UNITS

PARTICULARS AMOUNT
SALES 4080000
LESS:VARIABLE COST 2880000
CONTRIBUTION 1200000
LESS:FIXED COST 700000
PROFIT 500000
etition, the company proposes to reduce the selling price. Following is the details of its

Rs. 30,00,000
Rs. 18,00,000
Rs. 7,00,000
Rs. 25,00,000
Rs. 5,00,000
lling price is reduced by (a) 5% and (b) 10% while maintaining the existing level of profit.
r to out-place the competitors, find out theprice it should charge to continue to earn the

NO. OF UNITS SOLD SELLING PRICE

30000 100

VARIABLE COST PER UNIT 60

NO. OF UNITS TO BE SOLD SELLING PRICE

34285.7142857143 95

THE NUMBER OF UNITS SOLD TO BE INCREASED BY

4286 UNITS

NO. OF UNITS TO BE SOLD SELLING PRICE

40000 90
 THE NUMBER OF UNITS SOLD TO BE INCREASED BY
10000 UNITS

MPANY TO BE SOLD NEXT YEAR IS

NO. OF UNITS TO BE SOLD SELLING PRICE

48000 85

THE SELLING PRICE TO BE SET AT 85

TO EARN THE DESIRED PROFIT OF RS. 500000
NUMBER OF UNITS TO BE SOLD TO EARN RS. 500000 PROFIT

INPUT VARIABLE UNITS TO BE SOLD

TARGET VARIABLE PROFIT
DESIRED VALUE OF TARGET VARIABLE 500000

NUMBER OF UNITS TO BE SOLD TO EARN RS. 500000 PROFIT

INPUT VARIABLE UNITS TO BE SOLD

TARGET VARIABLE PROFIT
DESIRED VALUE OF TARGET VARIABLE 500000

SELLING PRICE TO EARN A PROFIT OF 500000

INPUT VARIABLE SELLING PRICE
TARGET VARIABLE PROFIT
DESIRED VALUE OF TARGET VARIABLE 500000
 A toy manufacturer earns an average net profit of 30 per unit in a selling price of 150 by producing and selling
composition of his cost of sales is as follows:
Rs.
Direct material 40
Direct wages 10
Works overheads 50 (50% Fixed)
Sales overheads 20 (25% Variable)
During the current year, he intends to produce the same number but anticipates that :
(i) The fixed charges will go up by 10%.
(ii) Rates of labour will increase by 20%.
(iii) Rates of direct materials will increase by 5%.
(iv) Selling price cannot be increased.
Under these circumstances he obtains an order for a further 20% of his capacity. What minimum price will you re
ensure the manufacturer earn an overall profit of Rs. 17,40,000

Solve By Using Goal Seek

SOLUTION-

ORIGINAL 60% Capacity = 60000 units

Qty SP Total
Sales 60000 150 9000000
(-) Variable Cost:
Direct Material 60000 40 2400000
Direct Wages 60000 10 600000
Works Overhead 60000 25 1500000
Sales Overhead 60000 5 300000
= Contribution 4200000
(-) Fixed Cost:
Works Overhead 60000 25 1500000
Sales Overhead 60000 15 900000
= Net Profit 60000 30 1800000
50 by producing and selling 60,000 units at 60% of its capacity. The

Fixed)
Variable)
:

t minimum price will you recommend for accepting the order so as to

VARIED FIGURES80% CAPACITY = 80000 units

Qty SP Total
Sales 80000 135.75 1.1E+07
(-) Variable Cost:
Direct Material 80000 42 3360000
Direct Wages 80000 12 960000
Works Overhead 80000 25 2000000
Sales Overhead 80000 5 400000
= Contribution 4140000
(-) Fixed Cost:
Works Overhead 60000 25 1500000
Sales Overhead 60000 15 900000
= Net Profit 80000 30 1740000
 Modern Sports Ltd. has for the past several years produced boxing gloves which are sold at Rs.28 per pair. Highe
adequacy of this selling price.
The labour rate was increased from Rs.1.75 per hour to Rs. 2.25 per hour and the cost of leather has gone up fro
expenses have increased 25% from the level of Rs.18,000 five years ago. Over the same period variable overhead
sq. ft. of leather and one hour of direct labour.
Calculate the selling price that the company has to charge under the new cost structure to break-even at the sam

Solve By Using Goal Seek

SOLUTION- GIVEN INFORMATION

PARTICULARS OLD
SELLING PRICE 28
LABOUR COST PER HOUR 1.75
LEATHER COST PER UNIT 1.1
VARIABLE OVERHEADS 10
FIXED EXPENSES 18000

COMPUTATION OF COST FOR EACH PAIR OF GLOVES

PARTICULARS OLD
SELLING PRICE 28
LABOUR COST 1.75
LEATHER COST 1.65
VARIABLE OVERHEADS 10
CONTRIBUTION 14.6

BREAK EVEN POINT 1233

 sold at Rs.28 per pair. Higher costs in recent years have made management to consider about the

ost of leather has gone up from Rs.1.10 to Rs.2.15 per square foot during the last five years. Fixed
me period variable overhead has increased 30%, or Rs.3 per pair of gloves. Each glove requires 1.5

ure to break-even at the same number of units as five years ago.

GIVEN INFORMATION

NEW
?
2.25
2.15
13
22500

NEW
36.725
2.25
3.225
13
18.25

1233
 JAL Ltd. can produce three different products from the same raw material using the same p
Particulars X Y
Maximum market demand (units) 6,000 4,000 3,0
Selling price per unit (Rs. ) 250 200 40
Raw material as % of sales value 80% 60% 75
Labour cost per unit ( Rs.) 24 40
Overhead Rate is Rs.10 per hour of which 60% is fixed. Raw material available is @ Rs.20
Required: Find out the Optimum Product Mix and determine the Profit at the selected prod

Solution should be based on SOLVER

SOLUTION-

X Y
SELLING PRICE 250 200
VARIABLE COSTS-
1. RAW MATERIAL 200 120
2. LABOUR COST 24 40
3. OVERHEAD
a. Variable Cost 6 10
TOTAL VARAIABLE COST 230 170
CONTRIBUTION 20 30
Kg of Raw Material Required 10 6
Labour Hours Required 1.5 2.5

A. EXPECTED DEMAND 3100 4000

CONTRIBUTION 362000
MATERIAL 10 6

B. EXPECTED DEMAND 6000 1360

CONTRIBUTION 340800
LABOUR 1.5 2.5
w material using the same production facilities. The relevant details are as follows:
Y Z
4,000 3,000
200 400
60% 75%
40 32
aterial available is @ Rs.20 per kg and labour hours @ Rs.16 per hour.
e Profit at the selected product Mix if a) Raw material is limted to 100000 kg, b) If Labour hours are limited to 1

Z X Y Z
400 Kg of Raw Material Required 10 6 15
Labour Hours Required 1.5 2.5 2
300
32

8
340
60
15
2

3000
FIXED COST 123900 PROFIT 238100
15 100000

3000
FIXED COST 110400 PROFIT 230400
2 18400
abour hours are limited to 18,400 hours.
 A company is at present working at 90 percent of its capacity and producing 13,500 units per annu
from its budget:
90%(Rs.)
Sales 15,00,000
Fixed expenses 3,00,500 3
Semi-fixed expenses 97,500 1
Variable expenses 1,45,000 1
Units made 13,500
Labour and material cost per unit are constant under present conditions. Profit margin is 10 percen
(a) You are required to determine the differential cost of producing 1,500 units by increasing capac
(b) What would you recommend for an export price for these 1,500 units taking into account the ov

SOLUTION-
FIRST OF ALL WE NEED TO COMPUTE THE MATERIAL AND
rking at 90 percent of its capacity and producing 13,500 units per annum. It operates a flexible budgetary control system. The following fig

90%(Rs.) 100% (Rs.)

15,00,000 16,00,000
3,00,500 3,00,6,00
97,500 1,00,500
1,45,000 1,49,500
13,500 15,000
r unit are constant under present conditions. Profit margin is 10 percent.
mine the differential cost of producing 1,500 units by increasing capacity to100 percent.
end for an export price for these 1,500 units taking into account the overseasprices are much lower than indigenous prices?

FIRST OF ALL WE NEED TO COMPUTE THE MATERIAL AND LABOUR COST FOR THE COMPUTATION OF DIFFEREN

PARTICULARS AT 90% CAPACITY

SALES (13500 UNITS) 1500000
LESS: PROFIT MARGIN @10% 150000
COST OF GOODS SOLD 1350000
LESS:VARIABLE EXPENSES 145000
LESS:SEMI-FIXED EXPENSES 97500
LESS: FIXED EXPENSES 300500
COST OF LABOUR AND MATERIAL 807000

LABOUR AND MATERIAL COST AT 100% CAPACITY= COST OF MATERIAL AND LABOUR*(100/90)
896666.666666667

STATEMENT OF DIFFERENTIAL COST ANALYSIS

PARTICULARS 90% 100% DIFFERENTIAL

PRODUCTION (UNITS) 13500 15000 1500
LABOUR AND MATERIAL COST 807000 896666.7 89666.67
VARIABLE EXPENSES 145000 149500 4500
SEMI-FIXED EXPENSES 97500 100400 2900
FIXED EXPENSES 300500 300600 100
TOTAL 97166.67
 control system. The following figures are obtained

indigenous prices?

OMPUTATION OF DIFFERENTIAL COST.

DIFFERENTIAL COST PER UNIT= DIFFERENTIAL COST/DIFFE

64.77778

AT THIS PRICE OF 64.7778, THERE WILL BE NO ADDITIONA

D LABOUR*(100/90)

DIFFERENTIAL
IFFERENTIAL COST/DIFFERENTIAL UNITS

E WILL BE NO ADDITIONAL PROFIT, THEREFORE ANY PRICE ABOVE THIS SHOULD BE ACCEPTED FOR THE EXPORT
CEPTED FOR THE EXPORT OPPORTUNITY
Top-tech a manufacturing company is presently evaluating two possible machines for the manufacture of superior Pen-drives. The following

Required: (i) Recommend which machine should be chosen?

SOLUTION- i)

ii)
IF 5000 UNITS ARE PRODUCED, THEN MACHINE B WILL BE CHOSEN BECAUSE IT HAS LOWER COST TH

IF 1000 UNITS ARE PRODUCED, THEN MACHINE A WILL BE CHOSEN BECAUSE IT HAS LOWER COST TH

CONCLUSION-
FOR ANY LEVEL OF OUTPUT BELOW THE COST INDIFFERENCE POINT OF 2500 UNITS CHOOSE MACHIN
Particulars Machine A
Variable cost per unit (Rs.) 50
Total fixed costs per year 50000

CIP
ii) Suggest the most economical alternative machine to replace the existing one when the expected level of output is
a) 5000

COST INDIFFERENCE POINT (IN UNITS)= DIFFERENCE IN FIXED COST/DIFFERENCE IN VARIABLE

2500

UNITS OF OUTPUT TOTAL VARIABLE COST

0 0
500 25000
1000 50000
1500 75000
2000 100000
2500 125000
3000 150000
3500 175000
4000 200000
4500 225000
5000 250000
5500 275000
6000 300000
6500 325000
7000 350000
7500 375000
8000 400000

MACHIN
500000
450000
400000
350000
L COST

300000
250000
 MACHIN
500000
450000
400000
350000

TOTAL COST
COST INDIFFERENCE POINT
(UNITS) 300000
250000
AT 1000 UNITS,200000
CHOOSE MACHINE 6
A
150000
100000
50000
0
0 1000 2000 3000

TOTAL
 Machine B
10
150000

when the expected level of output is

b)1000

XED COST/DIFFERENCE IN VARIABLE COST PU

MACHINE A MACHINE B
TOTAL FIXED COSTTOTAL COST (A)TOTAL VARIABLE COS TOTAL FIXED COST
50000 50000 0 150000
50000 75000 5000 150000
50000 100000 10000 150000
50000 125000 15000 150000
50000 150000 20000 150000
50000 175000 25000 150000
50000 200000 30000 150000
50000 225000 35000 150000
50000 250000 40000 150000
50000 275000 45000 150000
50000 300000 50000 150000
50000 325000 55000 150000
50000 350000 60000 150000
50000 375000 65000 150000
50000 400000 70000 150000
50000 425000 75000 150000
50000 450000 80000 150000

MACHINE A VS MACHINE B
00000
50000
00000
50000
00000
50000
 MACHINE A VS MACHINE B
00000
50000
00000
AT 5000 UNITS, CHOOSE
50000 MACHINE B
FFERENCE POINT
00000
50000
00000
6
50000
00000
50000
0
0 1000 2000 3000 4000 5000 6000 7000 8000 9000

UNITS OF OUTPUT

TOTAL COST (A) TOTAL COST(B)

TOTAL COST(B)
150000
155000
160000
165000
170000
175000
180000
185000
190000
195000
200000
205000
210000
215000
220000
225000
230000
8000 9000
SR Ltd. provides you the following information for its current y
SR Ltd. provides you the following information for its current year of operations:
Selling price (Rs.)
Variable cost per unit (Rs.)
Fixed costs per annum (Rs.)
Sales / Production (units)
Draw a BE Chart with orignal FC and Revised FC from the above information

SOLUTION- WHEN THE FIXED COST IS 160000

CASE ii) WHEN THE FIXED COST IS

200
 20
12
160000 Revised FC 200000
25000

UNITS OF OUTPUT TOTAL VARIABLE COST TOTAL FIXED COST

0 0 160000
1000 12000 160000
2000 24000 160000
3000 36000 160000
4000 48000 160000
5000 60000 160000
6000 72000 160000
7000 84000 160000
8000 96000 160000
9000 108000 160000
10000 120000 160000
11000 132000 160000
12000 144000 160000
13000 156000 160000
14000 168000 160000
15000 180000 160000
16000 192000 160000
17000 204000 160000
18000 216000 160000
19000 228000 160000
20000 240000 160000
21000 252000 160000
22000 264000 160000
23000 276000 160000
24000 288000 160000
25000 300000 160000

UNITS OF OUTPUT TOTAL VARIABLE COST TOTAL FIXED COST

0 0 200000
 1000 12000 200000
2000 24000 200000
3000 36000 200000
4000 48000 200000
5000 60000 200000
6000 72000 200000
7000 84000 200000
8000 96000 200000
9000 108000 200000
10000 120000 200000
11000 132000 200000
12000 144000 200000
13000 156000 200000
14000 168000 200000
15000 180000 200000
16000 192000 200000
17000 204000 200000
18000 216000 200000
19000 228000 200000
20000 240000 200000
21000 252000 200000
22000 264000 200000
23000 276000 200000
24000 288000 200000
25000 300000 200000
TOTAL SALES/REVENUE TOTAL COST PROFIT/LOSS
0 160000 -160000 B
20000 172000 -152000
40000 184000 -144000 600000
60000 196000 -136000
80000 208000 -128000
100000 220000 -120000 500000
120000 232000 -112000
140000 244000 -104000
160000 256000 -96000 400000
180000 268000 -88000
200000 280000 -80000

TOTAL REVENUE/COST
220000 292000 -72000 300000

240000 304000 -64000

260000 316000 -56000
280000 328000 -48000 200000

300000 340000 -40000

320000 352000 -32000
340000 364000 -24000 100000

360000 376000 -16000

380000 388000 -8000
400000 400000 0 0
0 00 000 000 00
420000 412000 8000 10 2 3 4
440000 424000 16000
460000 436000 24000
480000 448000 32000
500000 460000 40000

TOTAL SALES/REVENUE TOTAL COST PROFIT/LOSS

0 200000 -200000
 20000 212000 -192000
40000 224000 -184000
60000 236000 -176000
80000 248000 -168000
100000 260000 -160000
120000 272000 -152000
140000 284000 -144000
160000 296000 -136000
600000
180000 308000 -128000
200000 320000 -120000
220000 332000 -112000
500000
240000 344000 -104000
260000 356000 -96000
280000 368000 -88000
400000
300000 380000 -80000

TOTAL REVENUE/COST
320000 392000 -72000
340000 404000 -64000 300000
360000 416000 -56000
380000 428000 -48000
400000 440000 -40000 200000
420000 452000 -32000
440000 464000 -24000
460000 476000 -16000 100000
480000 488000 -8000
500000 500000 0
0
 BREAK EVEN POINT CHART OF SR LTD
600000

500000
PROFI
T

400000 400000

300000

200000
LOSS

100000

0
0 00 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000
10 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

UNITS SOLD

TOTAL SALES/REVENUE TOTAL COST

 REVISED BREAK EVEN CHART OF SR LTD.
600000

500000 500000

400000
TOTAL REVENUE/COST

300000

200000

100000

UNITS OF OUTPUT

TOTAL SALES/REVENUE TOTAL COST

 PROFI
T

0 0 0
00 400 500
2 2
500000
A company is manufacturing three products details of which, for the last year, are given below:

Product Price( Rs.) Variable Cost ( Rs. ) Sales mix

A 200 120 20
B 160 120 30
C 100 40 50
Total fixed cost per year Rs.11,60,000
You are required to work out
(II)Product wise BEP in units & in Rs.
(v) the predicted units of output a

SOLUTION-

PRODUCT
A
B
C

GIVEN FIXED COST

1) OVERALL BREAK EVEN POINT =

2) COMPUTATION OF PRODUCT WISE BREAK EVEN POINT

PRODUCT
A
B
C

3) OVERALL BEP IN RS.

4) OVERALL PV RATIO=

5) TABLE OF PREDICTED COST AND REVENUE

UNITS
10000
15000
20000
25000
30000

6) GRAPHICAL PRESENTATION OF PART 5 ABOVE COMPUTED

e last year, are given below:

Sales mix
20
30
50
0,000
(I)The overall break-even point in units
(iii) overall BEP in value
the predicted units of output are 10000,15000,20000,25000 and 30000 (v

PRICE SALES MIX

200 0.2
160 0.3
100 0.5

1160000

FIXED COST/WEIGHTED CONTRIBUTION PU

20000

WEIGHTED AVERAGE SALES PU WEIGHTED AVERAGE VARIABLE COST P

40 24
48 36
50 20
138 80

2760000

TOTAL FIXED COST/OVERALL BREAK EVEN POINT(IN RS.)

42.03%
TOTAL FIXED COST TOTAL VARIABLE COST
1160000 800000
1160000 1200000
1160000 1600000
1160000 2000000
1160000 2400000

BREAK EVEN CHART

4500000
4000000
PROFIT
TOTAL SALES/COST

3500000
3000000
2760000
2500000
2000000
LOS
1500000
S
1000000
500000
0
10000 15000 20000 25000 30000

UNITS OF OUTPUT

TOTAL COST TOTAL SALES

break-even point in units
(iv) Overall PV ratio
(vi) Graphically show overall BEP & PV ration

VARIABLE COST PU CONTRIBUTION PUWEIGHTED SALES

120 80 40
120 40 48
40 60 50
138

WEIGHTED AVERAGE CPUBEP(IN UNITS) BEP(IN RUPEES)

16 4000 800000
12 6000 960000
30 10000 1000000
58 20000 2760000
TOTAL COST TOTAL SALES PROFIT/LOSS
1960000 1380000 -580000
2360000 2070000 -290000
2760000 2760000 0
3160000 3450000 290000
3560000 4140000 580000

PROFIT VOLUME CHART

800000
600000
400000
PROFIT/LOSS

200000
0 0
10000 15000 20000 25000 30000
-200000
-400000
-600000
-800000

UNITS OF OUTPUT
(iv) Overall PV ratio

WEIGHTED CONTRIBUTION PER UNIT

16
12
30
58
25000 30000
A company has a capacity of producing 50,000 units of a product in a month. The sales departmen
prices is possible:
Volume of sales (% capacity) Selling price per unit
50% 2.00
60% 1.90
70% 1.85
80% 1.80
90% 1.70
100% 1.60
Total fixed cost at 100% capacity is Rs.20,000 per month and variable cost per unit is Rs.1 per unit.
Prepare a statement showing total and differential costs.

Use Scenario Manager to solve this fu

SOLUTION-
CAPACITY
PARTICULARS 50% 60% 70% 80%
UNITS 25000 30000 35000 40000
SP 2 1.9 1.85 1.8
REVENUE 50000 57000 64750 72000
VC 25000 30000 35000 40000
CONTRIBUTION 25000 27000 29750 32000
FIXED COST 20000 20000 20000 20000
PROFIT 5000 7000 9750 12000

DIFFERENTIAL COST 5000

INCREMENTAL REVENUE NIL 2000 2750 2250
th. The sales department reports that the following schedule of selling

er unit
00
90
85
80
70
60
per unit is Rs.1 per unit.

to solve this function

VARIABLE COST= 1

90% 100%
45000 50000
1.7 1.6
76500 80000
45000 50000
31500 30000
20000 20000
11500 10000

-500 -1500
Scenario Summary
Current Values: 60 70 80
Created by Created by Created by
Jay Upadhyay Jay Upadhyay Jay Upadhyay
on 20-11- on 20-11- on 20-11-
2024 2024 2024

Changing Cells:
$C$15 25000 30000 35000 40000
$C$16 2 1.9 1.85 1.8
Result Cells:
$H$18
Notes: Current Values column represents values of changing cells at
time Scenario Summary Report was created. Changing cells for each
scenario are highlighted in gray.
 90 100
Created by Created by
Jay Upadhyay Jay Upadhyay
on 20-11- on 20-11-
2024 2024

45000 50000
1.7 1.6

anging cells at
cells for each
Following information is available with resp
Selling Price 850
Units Sold 500
Variable Cost per Unit 250
Fixed Cost 10000

Part I - You are required to compute an expected change in each of the following cases so as to ach
even value.
Case 1 If there is a change in selling price per unit
Case 2 If there is a change in units sold
Case 3 If there is a change in cost per unit
Case 4 If there is a change in Fixed Cost

Part II - What will be profit, if the units sold are 500,600,700 and 800. Part III - Also
the profit in the following scenarios:-
Amount
Worst
Selling Price 700
Units Sold 300
Cost per unit 350
Better
Selling Price 860
Units Sold 600
Cost per unit 280
Best
Selling Price 1000
Units Sold 800
Cost per unit 200
 cted change in each of the following cases so as to achieve a break

ange in selling price per unit

ange in units sold
ange in cost per unit
ange in Fixed Cost

are 500,600,700 and 800. Part III - Also, what will be

Solve the question by using Goal-Seek, Data table and Scenario Manag

ORIGINAL PROPOSITION
PARTICULARS AMOUNT
SELLING PRICE 850
UNITS SOLD 500

REVENUE 425000
VC 250
TVC 125000
CONTRIBUTION 300000
FIXED COST 10000
PROFIT 290000
Scenario Manager
Scenario Summary
Current Values: 1 2 3
Created by Jay Created by Jay Created by Jay
Upadhyay on Upadhyayi on Upadhyayi on
20-11-2024 20-11-2024 20-11-2024
Changing Cells:
UNITSSOL 500 500 600 700
Result Cells:
$D$37 290000 290000 350000 410000
Notes: Current Values column represents values of changing cells at
time Scenario Summary Report was created. Changing cells for each
scenario are highlighted in gray.
 4
Created by Jay
Upadhyay on
20-11-2024

800

470000
nging cells at
cells for each
Scenario Summary
Current Values: WORST BETTER
Created by Jay Created by Jay
Upadhyay on Upadhyay on
20-11-2024 20-11-2024
Changing Cells:
SELLINGPRICE 850 700 860
UNITSSOLD 500 300 600
VARIABLECOST 250 350 280
Result Cells:
$D$37 290000 95000 338000
Notes: Current Values column represents values of changing cells at
time Scenario Summary Report was created. Changing cells for each
scenario are highlighted in gray.
 BEST
Created by Jay
Upadhyay on
20-11-2024

1000
800
200

630000
ging cells at
cells for each
SR Ltd. provides you the following information for its current year of operations:
SR Ltd. provides you the following information for its current year of operations:
Selling price (Rs.)
Variable cost per unit (Rs.)
Fixed costs per annum (Rs.)
Sales / Production (units)
Draw a Break Even Chart, Contribution Chart and Profit Volume Chart from the above information

SOLUTION-
 20
12
160000
25000

UNITS TOTAL FIXED COST TOTAL VARIABLE COST TOTAL COST

0 160000 0 160000
1000 160000 12000 172000
2000 160000 24000 184000
3000 160000 36000 196000
4000 160000 48000 208000
5000 160000 60000 220000
6000 160000 72000 232000
7000 160000 84000 244000
8000 160000 96000 256000
9000 160000 108000 268000
10000 160000 120000 280000
11000 160000 132000 292000
12000 160000 144000 304000
13000 160000 156000 316000
14000 160000 168000 328000
15000 160000 180000 340000
16000 160000 192000 352000
17000 160000 204000 364000
18000 160000 216000 376000
19000 160000 228000 388000
20000 160000 240000 400000
21000 160000 252000 412000
22000 160000 264000 424000
23000 160000 276000 436000
24000 160000 288000 448000
25000 160000 300000 460000
TOTAL SALES/REVENUE PROFIT/LOSS CONTRIBUTION BREAK E
0 -160000 0 600000

TOTAL REVENUE/COST
20000 -152000 8000 500000
40000 -144000 16000 400000
60000 -136000 24000 300000
80000 -128000 32000 200000
100000 -120000 40000 100000
120000 -112000 48000 0
140000 -104000 56000 0 0 0 0 0
160000 -96000 64000 20 40

180000 -88000 72000

200000 -80000 80000
220000 -72000 88000
T
240000 -64000 96000
260000 -56000 104000
280000 -48000 112000
300000 -40000 120000 CONTR
320000 -32000 128000 250000
340000 -24000 136000
360000 -16000 144000 200000
CONTRIBUTION

380000 -8000 152000 150000

400000 0 160000
420000 8000 168000 100000

440000 16000 176000 50000

460000 24000 184000
0
480000 32000 192000 0 00 00
500000 40000 200000 20 40
 BREAK EVEN POINT CHART OF SR LTD. PROFIT
00000 1.2
00000
PROFIT 1
00000 400000
00000 0.8

PROFIT/LOSS
00000
0.6
00000 LOS
0 S 0.4
0 00 00 00 00 0 00 0 00 0 00 0 00 0 00 0 00 0 00 0 00
20 40 60 80 10 12 14 16 18 20 22 24
0.2

UNITS OF OUTPUT 0
0.8 1

TOTAL COST TOTAL SALES/REVENUE

CONTRIBUTION CHART OF SR LTD.

50000

00000

50000

00000

50000

0
0 00 00 00 00 0 00 0 00 0 00 0 00 0 00 0 00 0 00 0 00
20 40 60 80 10 12 14 16 18 20 22 24
UNITS SOLD
 PROFIT VOLUME CHART OF SR LTD.
1.2

0.8
PROFIT/LOSS

0.6

0.4

0.2

0
0.8 1 1.2 1.4 1.6 1.8 2

UNITS OF OUTPUT
 ABC Ltd. manufacturing company producing three types of products i.e. P, Q an
Products P Q
Selling Pric 200 260
Raw Materia 0.5 1.2
Direct Mate 0.25 -
Skiiled Lab 4 6
Semi Skiile 2 2
Variable O 40 80
Prices of raw materials and direct materials respectively, are ₹ 100 and ₹ 40 per
day for 25 days in a month. The position of inventory are as follows -
Particulars Raw Materials Direct Materials
Opening 600 400
Closing 650 260
The fixed overhead amounts to ₹ 2,00,000 per month. The company desires a p
1. Sales budget in quantity and value
2. Production budget showing quantity to be manufactured.
3. Purchase budget showing the quantity and value.
4. Direct labour budget showing the number of workers and wages

SALES BUDGET IN QUANTITY

PARTICULARS
SELLING PRICE
VARIABLE COST
RAW MATERIAL 100
DIRECT MATERIAL 40
SKILLED LABOUR 6
SEMI SKILLED LABOUR 5
VARIABLE OVERHEADS
TOTAL VARIABLE COST
CONTRIBUTION PER UNIT
MIX
WEIGHTED CONTRIBUTION

SALES BUDGET IN VALUE

DESIRED PROFIT 120000
ADD:FIXED OVERHEADS 200000
DESIRED CONTRIBUTION 320000
NUMBER OF UNITS P,Q,R 549

SALES BUDGETED QUANTITY

SELLING PRICE
SALES VALUE

PRODUCTION BUDGET
PARTICULARS
BUDGETED SALES QUANTITY
ADD: CLOSING STOCK
LESS: OPENING STOCK
BUDGETED PRODUCTION

RAW MATERIAL USAGE BUDGET

PARTICULARS
BUDGETED PRODUCTION
RAW MATERIAL USAGE
TOTAL RAW MATERIAL REQUIRED
DIRECT MATERIAL USAGE
TOTAL DIRECT MATERIAL REQUIRED

MATERIAL PURCHASE BUDGET

PARTICULARS
BUDGETED USAGE
ADD:CLOSING STOCK
LESS:OPENING STOCK
BUDGETED PURCHASE
PRICE OF MATERIAL
COST OF PURCHASE

DIRECT LABOUR BUDGET

PARTICULARS P
BUDGETED PRODUCTION 4191
SKILLED LABOUR HOURS 4
TOTAL 16764
COST OF SKILLED LABOUR 6
TOTAL 100584
COST OF SEMI SKILLED LABOUR 5
TOTAL 83820
of products i.e. P, Q and R. The current pattern of sales of three products is in the ratio of 8:2:1 respectively. Th
R
420
2.5
-
8
3
80
are ₹ 100 and ₹ 40 per kg. Wage rate of skilled and semi-skilled labour, respectively, are ₹6 and ₹5. Each opera
as follows -
P Q R
400 100 50
200 300 50
e company desires a profit of ₹ 1,20,000 per month. Prepare the following for the month:

ed.

nd wages

P Q R
200 260 420

50 120 250
10
24 36 48
10 10 15
40 80 80
134 246 393
66 14 27
8 2 1 TOTAL WEIGHTED CONTRIBUTION
528 28 27 583

4391 1098 549

200 260 420
878216.123499 285420.2 230531.7

P Q R
4391 1098 549
200 300 50
400 100 50
4191 1298 549

TOTAL
P Q R
4191 1298 549
0.5 1.2 2.5
2096 1557 1372 5025
0.25
524 0 0 524

RAW MATERIALDIRECT MATERIAL

5025 524
650 260
600 400
5075 384 5459
100 40
507508 15355 522863

Q R
1298 549
6 8
7788 4392
6 6
46728 26352
5 5
38940 21960
ratio of 8:2:1 respectively. The relevant data are as follows -

ely, are ₹6 and ₹5. Each operator work 8 hours a

month:
The following data relates to ABC Ltd.
The financial manager has made the following sales forecast for the first 5 months of the co
Month Sales (₹)
April 40,000
May 45,000
June 55,000
July 60,000
August 50,000
Other and
1. Debtor's datacreditor's balance at the beginning of the year are ₹ 30,000 and ₹ 14,000 r
relevant assets and liabilities are
(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 p
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
You costs areto
are required ₹ prepare
5,000 per month
a cash including
budget ₹ 2,000
for the monthdepreciation.
of April, May and June 2023 respe
Total Receipts and Total Payment information graphically.

Solution

Cash Budget for the Period from April-June, 2025

For Whole
Particulars April May June
Quarter

Opening 7,500 33,000 37,000 7,500

Balance (A)
Receipts:

Cash Sales 16000 18000 22000 56000

Collection
from debtors 30000 24000 27000 81000
Total
46000 42000 49000 137000
Receipts (B)

Total Cash
Available
(A+B) 53,500 75,000 86,000 144,500
Payments
(C):

Payments to
Creditors 14000 33,000 36,000 83000
Sales
Commission
(5% of
3500 2000 2250 7750
previous
month's
sales)

Fixed Costs
(5,000-
2,000) 3,000 3,000 3,000 9,000
Total
Payments
(C) 20,500 38,000 41,250 99,750

Total Cash
Balance
(A+B-C) 33,000 37,000 44,750 44,750
he first 5 months of the coming year, commencing from 1 April 2023

₹ 30,000 and ₹ 14,000 respectively. The balance of other

onth following the sale.

The sales commission is paid in a month after it is earned.

nths budgted sales.

on.
May and June 2023 respectively. Also show Sales, Creditors,

Working Notes
(i) Given:
Month Sales
Cash sales
credit
April 40,000 16000 24,000

May 45,000
18000 27,000

June 55,000
22000 33,000
July 60,000 24000 36,000
August 50,000
20000 30,000

Payment of creditors
(ii)

Particulars April May June

2 months
Desired
ending
inventory,
60% of sales
60000 69000 66000
of next two
months
(Cost of
sales ) 115,000
100,000

Add: Cost
of sales of
current 24000 27000 33000
month's sale
(60%)

Total
finished
84,000 96,000 99,000
goods
requirement

Less:
Opening 51,000 60,000 69,000
stock

Purchases 33,000 36,000 30,000

Payment to
creditors
14,000 33,000 36,000
(Lag period
–1 month)
69000