MFA Chapter 6 Problems – MC & CVP Analysis

Problem 1
A product is sold at a price of Rs.120 per unit and its variable cost is Rs.80 per unit. The fixed
expenses of the business are Rs.8,000 per year. Find (i) BEP in Rs. and units, (ii) profits made
when sales are 240 units, (iii) Sales to be made to earn a net profit of Rs.5,000 for the year.

Problem 2
From the following figures ascertain the break-even sales;
Sales 20,00,000
Fixed Costs 5,00,000
Variable costs 12,00,000

Problem 3
The sales of a company are @ Rs.200 per unit 20,00,000
Variable cost 12,00,000
Fixed cost 6,00,000
The capacity of the factory 15,000 units
Determine the BEP. How much profit is the company making?

Problem 4
Sales are Rs.1,50,000, producing a profit of Rs.4,000 in period I. Sales are Rs.1,90,000,
producing a profit of Rs.12,000 in period II. Determine the BEP.

Problem 5
The following data relate to a manufacturing company:
Plant capacity 4,00,000 units per annum
Present utilisation 40%
Actuals for the year were:
Selling price Rs.50 per unit
Materials cost Rs.20 per unit
Variable manufacturing costs Rs.15 per unit
Fixed costs Rs.27 lakhs
In order to improve capacity utilization, the following proposals are being considered:
• Reduce selling price by 10%.
• Spend additionally Rs.3 lakhs on sales promotion.
How many units should be made and sold in order to earn a profit of Rs.5 lakhs per year?

Problem 6
Bharat Plastics make plastic buckets. An analysis of their accounting reveals:
• Variable cost per bucket Rs.20
• Fixed cost Rs.50,000 for the year
• Capacity 2000 buckets per year
• Selling price per bucket Rs.70
Required:
i) Find the break-even point
ii) Find the number of buckets to be sold to get a profit of Rs.30,000
 iii) If the company can manufacture 600 buckets more per year with an additional fixed
cost of Rs.2,000, what should be the revised selling price to maintain the profit
per bucket as at ii) above?

Problem 7

Problem 8

Problem 9

Problem 10