ABC Ltd furnished the following information

Particular 2010-11 2011-12

Sales 2,00,000 2,50,000
Profit 30,000 50,000
You are required to find out:
1. P/V ratio
2. BEP
3. Total variable cost for 2010-11 and 2011-12
4. Sales required to earn a profit of Rs.60,000
5. Profit/Loss when sales are Rs.1,00,000
6. MOS when profit is Rs.80,000
Solution:
1) P/V ratio= Change in profit/change in sales X100
= 20,000/50,000 X100= 40%

2. P/v ratio= F+P/S X 100=

In the year 2011-12,
P/V ratio= F + 50,000/2,50,000 X100
40% = F + 50,000/2,50,000 X100
So, F= 50,000
BEPS= F/P/V ratio X100
= 50,000/40%
= Rs.1,25,000

3. P/V ratio= S-V/S X100

In the year 2010-11
40%= 2,00,000-V/2,00,000X100
V= Rs.1,20,000
In the year 2011-12
40%= 2,50,000-V/2,50,000X100
V= Rs.1,50,000

4. P/v ratio= F+P/S X 100=

40%= 50,000+60,000/S
S= Rs.2,75,000

5. P/v ratio= F+P/S X 100

40% = 50,000+P/1,00,000
P= -10,000
Loss= 10,000

6. MOS= P/P/V ratio X100

= 80,000/40%
= Rs.2,00,000
Problems:
1. A company produces a single product which sells for Rs.20 per unit.
The variable cost is Rs.15 per unit and the fixed overhead for the year is
Rs.6,30,000

i) Calculate the sales value needed to earn a profit of 10% on sales

ii) Calculate the sales price per unit to bring the BEP down to
1,20,000 units
iii) Calculate the MS sales if the profit is Rs.60,000
2.

Material per unit Rs.50

Labour per unit Rs.80
Variable overhead per unit 75% of labour cost
Selling price per unit Rs.250
Total fixed overhead Rs.2,40,000

Find out:
1. BEPS in value and in volume
2. What would be the value and volume of sales if products are sold to
make a profit of Rs.1,20,000
3. If the selling price per unit is reduced by Rs.20, what would be the
BEPS in value and in volume?