Jagdish Sheth School of Management, Bangalore

Management Accounting (Batch 2022-24)

Course Instructor: Dr. Punita Rajpurohit
CVP Analysis
Sensitivity Analysis (what if analysis)
Practice Numericals
1. RC Ltd. provides following information
Fixed cost – Rs 5000
Variable cost – Rs 10 per unit
Selling price – Rs 20 per unit
Sales volume – 1000 units

Show the effect of the following on PV ratio, BEP, margin of safety, sales and
profit
 10% decrease in fixed cost
 10% decrease in variable cost
 10% increase in selling price
 10% increase in sales volume

2. LED Ltd. provides following information:

Particulars Amount in Rs
Selling price per unit 20
Direct material cost per unit 5
Direct labour cost per unit 3
Variable overhead cost per unit 2
Fixed cost 4,00,000
Sales volume 80,000 units

Calculate break-even point and margin of safety using the above information.
How will break-even point and margin of safety change: (i) if selling price per
unit is increased by 30% (ii) if selling price per unit is decreased by 10% (iii) if
fixed cost decreases by 10% (iv) if fixed cost increases by 20% (v) if sales volume
increases by 10,000 units

3. Basil Ltd. provides you following data:

Particulars Amount in Rs.
Sales (100000 units @ Rs 40) 40,00,000
Variable cost 20,00,000
Contribution 20,00,000
Fixed cost 5,00,000
Profit 15,00,000
Calculate PV ratio, break-even point, margin of safety, and profit for the following
cases:
 Increase in price by 20%
 Increase in price by 20% and decrease in volume by 25%
 Decrease in variable cost by 10% and increase in volume by 25%
 Increase in variable cost by 10%
 Increase in fixed cost by 5%