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01 Assignment CVP Basics Answer

The document provides instructions for students to enter their registration number, birthdate, and other details into an Excel spreadsheet. It instructs them to save the file with their registration number, enter details to receive questions, answer the questions in the spreadsheet, and upload the file before the deadline.

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KS
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73 views

01 Assignment CVP Basics Answer

The document provides instructions for students to enter their registration number, birthdate, and other details into an Excel spreadsheet. It instructs them to save the file with their registration number, enter details to receive questions, answer the questions in the spreadsheet, and upload the file before the deadline.

Uploaded by

KS
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
You are on page 1/ 8

Please insert the required details in the appropriate Cell

Student Regn No 2113067

Birth Date (DD.MM.YYY format)

Save the Excel File in your System


Rename the excel file with your Regn Number
Enter your Regn Number and other details to get Questions
Answer for your Question in the Same Excel Sheet
Present your Working in Green Shaded Area
Present your answers in Blue Shaded Area
Save the working File
Upload the excel file in Moodle before alloted time

Answer Summary
Q1a Break Even Point when MOS is at 20% 300
Q1b Sales Units required to earn a Profit of '60,000 500
Q1c Margin of Safety Percentage at the Sale of '2,40,000 1
Q1d Units of Margin of Safety at the Profit of '60,000 200

Q2a Fixed Cost 200,000


Q2b Break Even Points in Units 2,000
Q2c Break Even Points in Value 400,000
Q2d Profit at the Desired Capacity level 200,000

Q3a Break Even Point in Units for Product A -


Q3b Break Even Point in Units for Product B -
Q3c Break Even Point in Value for Product A -
Q3d Break Even Point in Value for Product B -
Question 1
A Company is dealing in Single product and provides you the following information
Selling Price per Unit 400
Variable Cost Per Unit 100

Fixed Overeheads 90,000

You are required to calculate:


1 Break Even Point when MOS is at 20%
2 Sales Units required to earn a Profit of '60,000 60,000
3 Margin of Safety Percentage at the Sale of '2,40,000 240,000
4 Units of Margin of Safety at the Profit of '60,000 60,000

Calculation of Break Even Point


Break Even Point = Fixed Cost / Contribution per Unit 300
Fixed Cost = 90000
Contribution per Unit = [Sale price - Variable Cost] 300

Sale Units to achieve the profit


Target Sale Units = [Fixed Cost + Target Profit] / Contribution per Unit
Profit 60,000
O 500
Sale Value = Sale Units X Sale Price per Unit 200,000

Margin of Safety Percentage


Actual Sale Value 240,000

Break Even Sale Value 120,000


Margin of Safety Value 120,000
Margin of Safety Percentage 50%

Units of Margin of Safety


Target Profit 60,000
Margin of Safety Units = Profit / Contribution per Unit 200
Answer Summary
1 Break Even Point when MOS is at 20% 300
2 Sales Units required to earn a Profit of '60,000 500
3 Margin of Safety Percentage at the Sale of '2,40,000 50%
4 Units of Margin of Safety at the Profit of '60,000 200

Verification
Sale Value 200,000
Less: Variable Cost in Total (50,000)
Contribution 150,000
Less: Fixed Cost (90,000)
Profit 60,000
Question 2
Bright Light Limited is into the business of manufacturing lighting products and provides following infor
Annual Capacity (in Units) 10,000
Year 1 Year 2
Sale Units 2,000 5,000
Total Cost (Rs.) 400,000 700,000
Selling Price per Unit 200 200
For the next year there will be no change in the Selling Price & Cost Structure
You are required to calculate for the next year
a) Fixed Cost
b) Break Even Point (in Units)
c) Break Even Point (in Value)
d) Profit at the capacity level of '40% 40%

Calculation of Fixed Cost


Variable Cost per Unit = Change in Total Cost / Change in Sale Units
Change in Total Cost = 300,000
Change in Sale Units = 3,000
Variable Cost per Unit = 100
Year 1 Year 2
Total Variable Cost 200,000 500,000
Fixed Cost 200,000 200,000

Fixed cost 200,000

Break Even Point


Break Even Point in Units = Fixed Cost / Contribution per Unit
Contribution per Unit = Sale Price - Variable Cost 100

Break Even Point in Units = 2,000

Break Even Point in Value = Break Even Point in Units X Sale Price 400,000

Profit at the Capacity of 40%


Utilised Capacity 40%
Sale Units at above capacity 4,000
Sale Value at above capacity 800,000
Less: Variable Cost (400,000)
Contribution 400,000
Less: Fixed Cost (200,000)
Profit 200,000
d provides following information:
Answer Summary
1 Fixed Cost 200,000
2 Break Even Points in Units 2,000
3 Break Even Points in Value 400,000
4 Profit at the Desired Capacity level 200,000 In case of Loss, mention as negative numbe
ntion as negative number
Question 3
Welcome Limited produces and sells two products A & B.
Budgets prepared for the next six months give the following information
Product A B
Selling Price per Unit 100 200
Variable Cost per Unit 40 50
Fixed Cost 390,000
Sales Ratio 4 1
If Products are sold in the above Sales ratio, state the
a) Break even point in number of units of each product
b) Break even point in rupee value for each product

Calculation of Combined Contribution


Product A B
Contribution per Unit 60 150
Sale Ratio 4 1
Combined Contribution 240 150 390

Calculation of Break Even Point


Combined Break Even Point 1,000

A B
Break Even Point Units 4,000 1,000
Break Even Value 400,000 200,000
Answer Summary
1 Break Even Point in Units for Product A 4,000
2 Break Even Point in Units for Product B 1,000
3 Break Even Point in Value for Product A 400,000
4 Break Even Point in Value for Product B 200,000

Verification A B
Break Even Sale Units 4,000 1,000
Break Even Sale Value 400,000 200,000
Less: Variable Cost (160,000) (50,000)
Contribution 240,000 150,000 390,000
Less: Fixed Cost (390,000)
No Profit No Loss -

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