‘BET : (9,000 X 38) cate rn rere HR (00,000 X 8) cor feces AAA (2,000 X28) 00,002 | aera att ae caer 80% IC 30,000 wee, Ue eT ok Ha HTT CaP OT y,800 194,000 ‘TET: (Goo X 33) gata) Sriaes ‘af 9,20,000 a a : weaRETE (HM CAUTAT do% A onsen . ecw es Fears WF (0,80,000 X 20%) pore a. SFRCES WITH TH 3% Hs were 38.0% war ite (22x ane) abnce WES, TH cera 2 wer = (0,00,000 x 2 ea al 3,30,000 ¢,000 RR NITE CHIE TT ¢0,000 | m 80,000 , @0,000 ; rT BT NICE Cr 3,90,000 Manan cat te ar¥,000 30 fee ret eho Ft: (a1 ENT 30%) ca Ht. 9] 20,000 ret @,000 & ere weer a ©. saatire oft weft: fw ; penne’, Freer [ris] rete raan) Oya n, 30,000 : | Ome oe ese 8. fect commen Far HT (6,000 x34) wicdtos Frmn (cow) $8,000 $2,900 (Cy) 4 eters Gop (Av8,000 ~ 80,000) x 20%: F : ivi 3 when abo sod to ear wet prof of TESOO $ and unit variabte cost Tk. 10. Per unit contribution = Sales per unit ~ Variable cost " Fixed Cost_+ Target Profit Required sales (units) = SSL Cos 5 7.(30,000 + $0,000) _ Tk:80.000 _ 16,000 units e TKS prt foe) Part-C , shahi : ‘You have been supplied with the following information about Harge Kalai of Rajs Sales per bread Tk. 10. z Variable expenses per unit Tk. 8. £ Fixed expenses per annum Tk. 1,38,000 Required : Calculate the followings: (a) Contribution per unit; | ; 4 {b) Contribution margin (CM) ratio/ Profit-Volume (PV) ratio; (©) Break-even point (BEP) in units under contribution margin approach (formula method); (@) Break-even point (BEP) in Tk/Amount under contribution margin approach; (©) Break-even point (BEP) in units under equation method. R(a): Contribution per unit = Sales Per unit ~ Variable Cost Per unit = Tk.(10 — 8) = Tk.2. a : jo = Lotttibution margin _Tk.2 R(b): Contribution Margin (CM)/Profit Volume (PV) Ratio = Sales =Tk 107 0.20= QR Fixed cost R(c): Break Even Point (in units) = pean Gonimbalion = eee = 69,000 units Fixed cost a one Contribution margin ratio Tk.138,000 = 7599 = T6,90,000 R(@): Break Even Point (in Taka/amount) R(e): Equation method: lrrgee TO: 4, equation method ¢ ARONA ATA FATS MT REE ye Unit contribution #1 PV ratio fen aifoa >a HM RA a | tg Cab Hee OUT fre 1.9 sTefS0s per even point *% target profit zero (+) | equation method Frrs:) WL NCS aa, or ecm - Break Profit = (Sales - Variable expenses) - Fixed expenses Or, Profit = (P x Q-V x Q) - Fixed expenses Or, Tk.0 = (Tk.10 x Q—Tk.8 x Q) ~ Tk. 1,38,000 Or. Tk.0 = (10Q - 8Q)-Tk.1,38,000. “Or, Tk.0-=2Q - Tk.1,38,000ive: Profit = Contrib Or, Profit= Unit Che (8) Contribution per unit (ae ef sect bution FO): aes ef er ce ‘gabe ra a oe ae or eon a ere oS RET owe ree ep a Tete TTS ee 100 Bret ex contribution (2 + 10-020) 20% aa er Ch Rang SES P| De {) Break-even point (BEP) in units (ace Fee - ef): cy rie Bee RR SET" Break-even poiat (BAPYD at 88 elt rar fare 10 88 ATR 254 8 Diet am fem eR eee 2 Dy me fixed cost © a FaIeH T_ATS ( ution ratio) Niat Si" saz"¢ Break Even Point in Taka "teu ae Le) 7 Fe eae St FET STH 1,38,000 Wet cng Uva cr MX re Race HEH, OR a Re ee N) FgAaE SHALE met (Contribution) wal eye abba fee av 8a menaced aie ate a SARE cor x tee 0.20 Dr (rate wee) 1 en Wey se 0.20 Wl BS we | Mewes Ree COTTER BEM FITS BLA 1,38,000 Bret (fea aH) 1 afew Fare: 0.20 Bret yom was fara ware xx | Brera a, Fea EE Tae Maen ATS Rr (1 + 0.20) Bre He, WA 1,38,000 Bet yom wonee Ronn ware ee + 0.20 x 1,38,000 = 1,38,000 + 0.20 =) 6,90,000 Brera ar *fixgs itm areca, Break Even Point (in units) ff" 408%" fixed cost Ge wee ‘af Were (Contribution Per unit) Wat eI saw aca) THIWR, Break Even Point (in Taka/volume) ff Fas WH fixed cost GE Stee WeIet SATs (Contribution ratio) Wal eM #28 ea |] nl) Pathitna26(R You hav. ied with the following information about Dignity Company ; : fg wat Te ‘variable expense a unit Tk. 22.80, Fixed expense per annum Tk. 6,08,000. In the Z Fear 2020, the Co. actually sells 48,000 units for Tk.18,24,000, luired : Calculate the followings: (@) Variable Expense Ratio; _ (6) CM ratio’ PV ratio; - (©) Total Contribution in 2020; ie (¢) BEP ratio; Margin of Safety Sales (MS Sales); MS ratio. ,pense Ratio = Revi TSS oie - [R(D): CM Ratio/PV Ratio = 1 ~ Variable Expense Ratio = (t it = TK.38.00~ 22.80) = Tk.15.20. Alternative Way: ; unit TK ’ W: Contribution per unit = Sales Per unit - Variable Cost es asa @)! i (CMyProfit Volume (PV) Ratio. = Contribution Margin ( a masa, eon =" TK3! we 4 fe ~ ewe er CF LRH 8 HH Eton Per unit e il 2020 = Actual/Total sales (um! R(e): Total contribution in 48.000 ualtt < TH.15.2 a tinea setion Margin Ratio (CMR) ive Way i Total sales Alternative Way: Total contribution 894,000" TOROS T1280. a rai tase San Seas oO RE a cee a oe reer a Piven Point (in units) ® Break Even we 7 Point (in Taka) Sexe Feta wx neta STEM |) —— Fixed cost____ Tk.608,000 _ 49 099 units Per unit Contribution ~ Tk.15.20 Fixed cost = “Contribution margin ratio T%.608,000 = 949 = TK-15,20,000 Break Even Point (in units) = Break Even Point (in Taka/amount) Or, Break Even Point (in Taka/amount ; Break Even Point (in units) x Sales per unit { = 40,000 units xTk.38 = Tk.15,20,000. { ; BEPRetio= PEP (units) __ 40000 units TK.1520000 Ble): BEP Ratio= "7 igal/Total Sales Cunils) = 48000 units °° T-1824000 = 0.8333 = 83.33% i ® : jo -——_BEP.(Tk) Tk.1520000 Merative Way: BEP Ratio =“ ctaitoul Sales (TK) = Te 1zaecbn = 0-83 q RAD}: Margin of safety (units) = Actu/Toal Sale (nts) BEP Sales (uns) = (48,000 40,000) units = 8,000 units ms Margin of safety (in Tk.) = Actual/Total Sales (Tk.)~ BEP Sales (Ty | Ro a , = 7K 18.24.000-7415,20,00 = Tk ane ‘ ir, M-egin of safety (in Tk.) = Margin of safety (units aaite | 3 = 6,000 units x Tk.38 = Tk.3,04,000 sp eacie Pes Ua % Bi Bis 0 2" MS Bales Tk.304,000 woth Rig): MS Ratio = 7 orai/Total Sales = TK 18,24,000 Or pee ite 0.16666 Alternative Way: MS Ratio = 1 - BEP Ratio = (1 —y.gyo ts ois lee bere stoma: 133) = 0.1666 = 16.67%, (4) Variable Expense Ratio (ofeeéatim 406 way), Var; : Expense, sales 4 89 tt 46 % 1 Sarwar, ib qe aTitble Exp thy i CO ar RL ererin eae so Wo sales nya fg CoE? S00 Dron oy TS CATE, Variable Erp Paria 1 1008 we" Variable Expense 22 27m, Variable Fr odes Expense Ratio | 80+ 38 =) 0.60 60 pees, 22.80 Bret | art (©) Total contribution (ox wate). cx + Ba em Variable contribution) | a ane ate (ca Tete) 48,000 units x Tk 18,24,000 Sie a a8 Brom te 0 0+)=TK7.29,6001 ee ™ a one Tot Bea Tee, eu cea eat SARS ables "Iet) Tk. 18,24, 000 X‘otal Actual/Total sales 4 1 Bret APR @ IE BEP Ratio | ie (0 Margin of safety Sales (Barret Le chi en wa neve, ees (To aE wa 15,20.000 Bt een exjerps Rane seen a PTS (BEP Sales ) ¢ (2) a Gt BEP Sal Tenace nt Bear eae os oa Ra eae DEP Ratio St MS Ratio a8 coir eH wet ai Hon wala wet mem Mee) a we tio 3 | wal, Gad wet > cee BEP Ratio (0. aaa i ( #5505) i MS Rado (tae 7 aaa re for TR ’ Following are the information of Rising Sun Company Sales Tk. 8,50,000. Variable expenses per unit Tk. 6,37,500. Fixed expenses per annum Tk. 1,57,500 Required : Calculate the followings: Variable Expense Ratio; CM ratio PV rati Amount of Contribution; Using the contribution margin approach, solve for the taka gales that are required to earn a profit of TKO; MS ratio; Amount of Profit; Profit ratio. . _ Variable Expense R(a): Variable Expense Ratio =P T R(b): CM Ratio/PV Ratio = 1 - Variable Expense Rati Alternative Way: We Contribution = Sales ~ Variable Cost = Tk.(8,50,000 ~ 6,37,500) Gor Contribution Margin (CM)/Profit Volume (PV) Ratio = il = Actual/Total sales (Tk.) x Contribution Margin Ratio (CMR) | se ee ee = Tk.8,50,000 x 0.25 = Tk.2,12,500. ee Alternative: Contribution = Sales ~ Variable Cost = Tk.(8,50,000 ~ 6,37,500) = Tk.2,12, 3 9 . a (rt SACS bra) GIR HE BHT Pra wom: li) ce at wea, “ere A 0 Dre wee FATE TH poreabbaieh pthc r eet Ci akalamaount men ee : cd‘Management Accounting (in English) ) otal Sales (Tk) ~BEP Sales Cr of safety (in Tk) = Actuate 630,000 = TK 220.000 shes Tk.220,000 = 0.2588 = 25.88%. enttat Saes "774. 850.000 * ~ 2. 74:630000 «9.7412 = 74.12% BEP Ratio =A cqgai/Total Sales (TK) ~ Tk.850000 MS Ratio = | - BEP Ratio = (1 - 0.7412) = 0.2588 = 25.88%. : ‘Actual/Total Sales - Variable Expenses — Fixed Expense: = TK8.50,000 Tk 6,37,500- Tk 1.57500 =TK.55.00, 6 Or, Profit. = MS Sales x PV/CM Ratio = Tk.2,20,000 x 0.25 or Or, Profit = Total Contribution — Fixed Expenses = (Actual/Total Sales x CM Ratio) ~ Fixed Expenses = (Tk.8,50,000 x 0.25) — Tk.1,57,500. = Tk.2,12,500 ~ Tk.1,57,500 = Tk 55,000. __Profiteamed __Tk.55.000__ iy 3 Ra) Prot Ratio =" syieg = Ti8.50-000 = 0047 = 64 > Or, Profit ratio = PV/CM Ratio x MS ratio = 0.25 x 0.2588 = 0.0647 = 6.47%. (Re tee: RO: «2 were alternative: Profit = Actual/total Sales x Profit Ratio = Tk.8,50,000 x 0.0647 or 6.47% = Tk.55,000. (g) Profit ratio (gate waite): Ravers Sora yaTeTA ATs AT GU FAP WETS (Profit Ratio) | we, af 5 They doo Dre Fare We Bret CHR ROR FANT SANTS (Profit Ratio) 1 a ace cas FAIA v,0,000 Bret vie FNM C¢,000 Bra | wae fee Fc WT AH, FAT WS b,¢0,000 Bret SAA TARA C¢,000 BTS RM RUE Med Bra AI S00 Dra wen BAT we are | flue WH 9 Brel weA ya ATA Bist (55,000 + 8,50,000 = ) 0.064% S.J R(D: Amount of Profit = You have been supplied with the following information about ILT Company for the year 2020: 9 MEaSaee, its product Tk. 25 per unit. Variable expenses per unit Tk. 16.25, Fixed expenses per annum: Required : Calculate the followings: (a) Contribution per unit; (b) Required sales (in units) if the Ca, wants to earn profit before tax Tk. i in uni 52,500, 3 (©) Required sales (in units) when the Co, made loss Tk.17,500, ora (@) Required sales in nits) at which profits zero () Required sales (in units) ifthe Co. wants to e. ; (Profi cor x whee ea a £8 profit afer tax Tk.42,000, tax rate 40%; R(a): Contribution Per unit Sales i = Per unit ~ Variable Cost € unit = Tk.(25.00 ? Per = .00 — 16.25 = Tk.8.75. - R(b): Required Sales in units) = Fixed cost + Ty Profit Ti1.73.000 + Bae : un ba werecy ons 0 + 52,500 Per unit Contribution Tk = 25.000 units ; 8.75, R(€): Required Sates (in units) Fixed cost + Tary t Profit Fixed cost - Los: me Per unit Contribution Ot "Ber unig Sr k.1.75,000 17,500 _Tk.1,57, h c 157-500 ie > Tk8.75 = 18,000 unitsCost-Volume-Profit Re} ~ Fixed cost + Target Profit Tete Rid): Required Sates (in units) unit Contribution Or, BEP (units) ——_Fixed cost = TK1.75.000+0 Te 1.75.000 Per unit Contribution i THES =" Th875 = 20,000 units ‘ sales (in units) zed Eepared ay Foie tx : aay Tk Tk.42000 75000 + Gi g.agy TK.175,000 + Tk42000 | RG): Reg ee es TKE7S Te = 7&:075,000 + 70000) _Tk.245,000 Tas = Tick 75 = 28,000 units Profit earned in 2020 © Actual/Total Sales ~ Variable Expenses — Fixed Expenses (23,000 units x Tk.25) - (23,000 units Tk. 3, xTk1625)-Tk i E.5,75,000 -—Tk:3,73,750—Tk.1,75,000 = Tk.2625)° Or, Profit in 2020 = Total Contribution ses 3 Fixed Expenses ‘Actual/Total Sales units x Pet =F unit contribution) ~ Fixed Expenses 23,000 units x 8.75) —Tk.1,75,000. aes = Tk.2,01,250 ~Tk.1,75,000 = Tk.26,2: > : 250. (a) Required sales (ecmet flax): Required sales 77s awd FAB fears ware woke are wea env ae re wee Sea eee Ts een Mal STMIOTA fixed cost 2 profit RO STATE RA WH fixed cost a AK profit CaM wae Wa Gem eee Cai Yen STATS WA fixed cost #7 profit we Ure Re ws Pres (a) HR: wie xine BARE Ue freed cone 6 PAY ON RA RO AT CU oN MAS GR ANT GA Bo SIMI MeN UM) aie ee ae ci ‘MARFA wat STATOTA fixed cost COT loss I Frm we rei cw Ore afar we BEM STATE Res I fined cost CWC loss aH FCS Wea | Ce) Ae aT AE EG (0): Fare awh oy TAR afte emt mio Orne 2 fixed cost Bor STATS BA | 1 (b) Profit after Tax: erstora seer 5c ANCE A G, contribution We SI ce yer Fen ae AB eee profit before tax | BR ex aH S48 profit after tax CFE AIC WIE CHI profit before tax a Mets we = : face Bra | profit affer tax (1 — Tax rate) Wal St e204 Bel profit before tax Ba we was AE profit ©) Before tax 1 Bre, tax rate 40% | TRIM tax = 1 x 40% = 0.40 BH 4% profit after tax = 1- 0.40 = 0.60 m Brat 1 Sfx Fara, profit after tax 0.60 Bre BM profit before tax 1 Br, SIE profit after tax 1 Bret ar profit before tax 1 = 0.60 {1 = (1 - 0.40)} Bret 1 ea, profit after tax 42,000 Bret xm CxSRTG CR) profit before tax {(1 + 0.60) x 42,000} = {(42,000 = 0.60) = 70,000 bre xa | lear : i ag You have been supplied with the following information about AB Company for 2020 Sales per unit Tk. 60, Variable expenses per unit Tk. 42, Fixed expenses per annum Tk. 3,27,000. Required : Calculate the followings: | @) Contribution ratio; lume). ; o Fea ake (in taka) if the Co. wants to earn operating income/profit Tk.96,000, tax rate 40%; (@) Required sales (in taka) if the Co. wants to earn net income/profit Tk. 72,000, tax rate 40%; (©) Required sales (in taka) when the Co, made loss Tk.15,000; V1 'k. 16,00,000. : (Pf es sao TA O00 wha it tag open name IATEY/ATH By,co0 Bret Roe RM AVM FARAH FE KEE AP) rare ae at fet eer es 4 FH A Te wes AH SU Gaon ea (Le. ‘operating income = profit before tax at net income = profit after tax)Management Accounting (In Eng! om mK unit W-+ Contribution per unit = Sales Per unit ~ Variable Cost esa mai = es (a): Contribution Mar ofit Volume (PV) Ratio = a it \(a): Contribution Margin (CM)Profit aa " TH327,000 _ 14, 166.666 = 18.167 units R(b): Break Even Point (in units) = pee ign = THIS | ; 00 Fixed cost_ _ Tk3:27.000 . 1, 10,90, BEP (in taka) * CMIPV Ratio "030 5.27.00 + 96:00 _ 75. 14.10,009 | : Fixed cost + Target Profit | Th3.2700° 2" ™ (©): Required Sales (in taka) ‘CMPPV Ratio ‘ R(q): Required Sales (in taka) = Bgdcoet Lass 73.27.00 - 15,000 _ 73.12.00 _ ry. 10,40,000. Wer parr! Desired Profit after tax Se Lie as eee > Rc): Required sles (in Tk) | == Tk.72000 RGii Tk.72000 E7200 27, o> Tk.327,000 + 7k327,000+ (7-940) _ 0.60 Ron “ 030 a 0.30 = T(G27,000+ 120000) _ 7-447,000 _ 7.14 69,000, € 0:30 0:30 RO Ri): Profit after tax = (Total Contribution — Fixed expenses) (TR). | {(Sales x CM ratio) ~ Fixed expenses} (1 - TR). {((16,00,000 x 0.30) — Tk.3,27,000)) (1 ~ 0.40). = {(4,80,000 - Tk.3,27,000)} (0.60) = Tk.1,53,000 x 0.60 = Tk.91,800. . i income = Tteet net profivineome _Tk.48.000_Tk.48.000 _ R(g): Required operating profivincome (-TaxRate)—="(1-0.40) = 0.69 = Tk-80,000 Rivi 9 The following figures for profit and sales are obtained from the account of X Co, Lid.: Year Sales Profit bt Taka ‘Tak: ae 00000 1,20,000 ee 8,00,000 180,000, iculate : 804 i. Profit Volume ratio; Fixed Expense; iii, Break even point, } iv. Profit when sales Tk. 350,000; ¥.. Sales to eam a profit of Tk. 42,000; vii. MS sales in 2020. | Change in Profit 7) 20, RW: BLY Ratio = cone a Eat _ Ti (80,000 eon nee = Tk.60,000 (180,000 ~ 1 “sin itte sae i 200,009 * 0.30 eb beter ‘men we | ern nem a mace PV Ratio ae] mm 2 ‘ contioaion ot Profit 1 fi Fixed Expcwe stem dary ee Expense oth eee gs Rib Ratio acm wa 2 creer cxt® contribution to OER . 2 fer ram Fined Expense a ce] eNOS oye tn rec ProfFixed Ex * Chapters > Costv, s % Volume Fixed Expense = Contribution — Profe lume-Profit Relationships ‘Sales x PV Ratio) - Profit Tk.8,00,000 m ek, ,000 x 0.30) = Tj , Dye mracae 80,000 = Tk Sa aa OE Ws eet Se i Th 80,000 =. ea599 , re ae = T6:0,000 x 0.30) ~7i1.20,000 188 Woe a se 8 Fey Lat wove Fixed Expense fc een een 000 = Tk.1,80000=Tk.1.20000=T.. sooo . ¥ CMF Variable Expens WET CHF Variable Expense @ Profit ain Pens es Pense PON Profit mow atu asa 0 Variable Expense orm oi 1 wap it amt on Fixed Expense ‘tem i welOos Sules'@ Frere crue Se Blo we Xora, FV OM, PV Ratio we fete ipa olen Lend . see Sos NIM Variable expense ratio. | we Ratio) aM een we Variable ee RENE ato, We errno Varabe eapense ato te pn R Ad Ritts Poreeel eda le expepse ratio = (1. PV Fiked Expense = Total Sales — Variable E: en Total Sales — {Total Sales x Variable = Total Sale: Sales x Variable expense ratio)} — Profit 2 les ~ {Total Sales x (1 - PV ratio)} ~ Profit = Tk-8,00,000 - {8,00,000 x (1- 0.30)} - Tk.1,80,000 = Tk8,00,000 - Tk.5,60,000 ~'Tk.1,80,000 = Tk.60,000 R(ili): Break even point = Fed expenses _ Tk. 60,000 > “PV Ratio = 0.30 = Tk-2,00,000 R(iv): Profit at sales Tk. 3,50,000: Profit = (Sales x PV Ratio) - Fixed cost = (Tk. 3,50,000 x 0.30) —Tk. 60,000= Tk. 1,05,000 — i 05,000 ~ Tk. 60,000 = Tk. 45, R(v): Sales to eam a profit of Tk. 42,000: en Required Sales (Tk,) = FH¢-cost + Desited Profit _Tk. 60,000 + Tk. 42,000 _ Tk. 102,000 2 ~ oat Sa = Te. 340,000 ; MS sales in 2020 = Actual/Total sales - BEP sales = Tk.3,40,000 - Tk.2,00,000 = Tk. 1,40,000. 9 The following data is extracted from the books of Novello and Company: Annual Sales (Taka) 3,00,000 Margin of Safety Ratio 20% Profit Volume Ratio 40% You are asked to calculate: (a) Breakeven sales in Taka; (b) Margin of safety in Taka; (c) Annual profit; (d) Estimated sales to earn a profit of Tk. 36,000; (e) Profit on sales of Tk. 2,90,000. en sales (Tk.) = Sales x BEP ratio = Sales x (1- MS ratio) les Beseeren i 4g Tk. 3,00,000 x (1 ~0,20) = Tk. 3,00,000 x 0.80 = Tk. 2,40,000, 240,000) = Tk. 60,000. Sales - BEP sales =:Tk.(3,00,000 ) = Sales x MS ratio = Tk. 3,00,000 x 0.20 = Tk £60,000. PV ratio = Tk.60,000 x 0.40 = Tk 24,000. , R(b) Margin of Safety (MS) (Tk) Or, Margin of Safety (MS) (Tk: R(@): Annual profit = Margin of safety xEng! jing (9 Management Accomine” 96,000. 5 . 2 TE96007 it x 040 5 * ratio) — Prof ) = Tk. 96,000 = BEP sales x PV aio = Th ales x PYF ago) - 24.000) Gost» Total contribution = Prout 090 = TO, = (TK.3,00,000 x 0.40) ~ T24P pe a K Assume, the profit T3600 ven nthe GU pore ed cost + Required sales (Tk,) = FeSO AOE rai 132,000 Tk.(96000-+ 36,000) , TET | a 0. ; xd cost | Re): Profit on sales of Tk. 2,90,000 ratio) ~ Fi 00 Profitoss = Contribution ~ Fixed cost = (Sales * PY .96,00 0.40) 000 oe 796,000) = Tk-20,000 TCL 16 PV ratio .sBEP Sales) (Act rood 2,40,000) XO 40 cs0.000 x 0.40 = Tk. 20,006 tribution cA VC Ratio a7 fie CM ratio shen a | ean Bert ace at 37H, 3 CA CM ratio wm fe VC Ratio em we | wR eT TE CM rat stem cron VC Ratio “emt wa) Be LOE SIT STATUE CA Ra) Se ae WA Cl, coutice fioneatone UeF Crm erxeN Sf ROnTetOna Tore afexeaee oh Rerens Rea = ratio *et aM | OR aera Sct Fate at ecm ce Corn SD Romeo See W/-1: Calculation of Profit : Profit for April = Sales ~ Costs (Total costs) = Tk.(1,05,000 - 84,000) = Tk.21,000 ’k.(1,15,500 ~ 89,585) = Tk.25,915 Profit for May = Calculation of CM rati . Change in profit _Tk.(25,915-21,000)__Tk4,915 CM ratio = Change in sales ~ Tk.(1,15,500 -105,000) = Tk.10,500 = 2468 Now, VC Ratio = (1 ~ CM Ratio) = (1 ~ 0.468) = 0.532. Fixed cost = Contribution — Profit = (Sales x CM ratio) ~ Profit. = (Tk.1,05,000 x 0.468) - Tk.21,000 (W-1) = Tk.49,140 - Tk.21,000 = Tk.28,140 Or, (Tk.1,15,500x0.468) - Tk.25,915(W-1) = Tk.54,055 - Tk.25,915 = Tk.28,140 Or, Fixed Cost = Total Cost - Variable Cost = Total cost ~ (Sales x VC = Tk.84,000 - (Tk. 1,05,000x0,532) = Tk. 84,000 - Tk.55,860 = Tk.28,140. Or, Tk.89,985 - (Tk.1,15,500x0,532) = Tk. 89,585 ~ Tk.61,445 = Tk.28,140. Fixed Cost _Tk.28,140 bi Rill): BEPinTk. = "CMfratio =” 0.468 = 700128 Contribution ~ Fixed cost = (Sales x CM ratio) ~ Fixed cost. Ri»): Profit (for July) (1k. 1,31,000 x 0.468) ~ Tk.28, 40 = Tk.61,308 ~ Tk 28,140 = Tk, 33,168. Fixed ex] sue 2 et Profit _ 28, 10s = Tk. 1,45,598 io . * Ry) : Target sales . i iwr (TK) 2020: ‘of the yom Dablin Lid. you the following data relating to the year ‘second half '8,00,000 | First half of the year (Th) 1,830,000 Pe 6,00,000 ieeorced fem 1 Oe fixed expenses areii : 4s and the Assuming that there is no change in prices and variable costs ane equally in the two half year periods. Calcalate for the year 2020: | PV ratio; . Fixed cost; = ii. Break even sales; gu brant He RE ATS TA) = + Sales required earning Tk. 235,000 (0,009 rm BUEN PES SETA ay grt 2A) ¥. Profit, when annual sales Tk.8,50,000 (¥,¢0,000 Brats | co ’k. 70,000 = 110,000) _ Tk.70,000- _ 9.35 a io = Change in Profit _7k.(180,000 — 110,000) _ T.70.000, RGD: PIV Ratio. =" Change in sales ~ “k.(800,000 = 600,000) ~ Tk.200,01 PV Ratio) — Profit. RG): Fixed cost (half yearly) = Contribution — Profit = (Sales x PV Ratio) ~ Profi = (Tk.6,00,000 x 0.35) — Tk.1,10,000 k.2,10,000 — Tk.1,10,000 = Tk. 1,00,000. > So, annual fixed cost/ fixed cost for 2020 = Tk.1,00,000 x 2 = Tk.2,00,000. Or, Fixed cost (annual) = Contribution — Profit = (Sales x PV Ratio) — Profit. - L(Tk.(6,00,000 + 8,00,000) x 0.35) - Tk-(1.10,000 + 1,80,000)} [{Tk.14,00,000 x 0.35) - Tk.2,90,000] = [Tk.4,90,000 - Tk2,90,000] = Tk. 2,00,000. = Tk. 5,71,429 R(iv): Sales to eam a profit of Tk. Fixed cost_+ Desired Profit Required Sales (Tk.) = PV Rac _ Tk. 200,000 + Tk. 235,000 Tk. 435,000. ss ey ¢ \ ae rs = 035 = Tk. 12,42,857 N R(¥): Profit at sales Tk. 8,50,000: Profit = (Sales x PV Ratio) ~ Fixed cost = (Tk, 8,50,000 x 0.35) - Tk. 2,00,000= Tk. 2,97,500— Tk. 2,00,000= Tk. 97 ieee CIT ‘An analysis of past and future costs of manufacturiig concem is given below - Cost elements Variable cost as Percentage of sales Dies anita 0 Direct labour 20 Factory Bverhead - Marketing expenses 5 General & Adminitrative Expense a Budgeted sales revenue for the year 2020 is Tk. 40,00 000 a Required : 1. The break even sales at Taka. 2. The PIV ratio, * The profit a the budgeted sales volume; + Tos profit if sales (a) dropped by 5%; b) increase by gq | NeR¢ Ws Variable cost ratio (VC rat ns rm io) = (0.3040, s(l- $ . Be = VC Ratio) « ( i W: Fixed cost Factory overhead + Marketi TK.(3,20,000 + 80,000 4 Beir) = Fixed Cost _ Tk 5.50, PV Ratio = 035 R(G): Profit at the budgeted sales volume Profit ~ Fixed cost = (Sales x PV Ratio) — Fi Tk. 40.00,000 x 0.25) -Tk. 5,50,000 : ee . 10,00,000 ~ Tk. 5,50,000 = R(A): (a) Profit if sales dropped by 54% ae Profit _ = Contribution ~ Fixed cost = (Sales x PV Ratio) -Fised Cost = LUTk 40,00,000 ~ (Tk. 40.00,000 x 0.05)} x 0.25] Tx. § 50.000 {Tk 40.00,000—Tk, 2,00,000} x 0.25) - Tk. $ 50,000 = [Tk. 38,00,000 x 0. 25] - Tk. 5,50,000 k. 9.50, 000 - : = Tk 4,00,000. Oe ee Or, Profit = Profit in budgted sales ~ (Sales decrease x PV Ratio) = Tk-4,50,000 ~ (Tk.40,00,000 x 54 x 0.25) Tk.4,50,000 — (Tk. 2,00,000 x 0.25) = Tk4,50,000 ~ Tk.50,000 = 7k-4,00,000. (b) Profit if sales increased by 8%: Profit = Profit in budgted sales + (Sales increase x PV Ratio) = Tk.4,50,000 + (Tk.40,00,000 x 8% x 0.25) = Tk.4,50,000 + (Tk. 3,20,000 x 0.25) = Tk-4,50,000 + Tk 80,000 = Tk 5,30,000. Note: Assumed that sales changes by 5% or 8% means sales amounl/volume changes but not ey price, Selling price remain the same Cost détails of a company given below: Details Taka Sales (Per unit) aa Direct materials (Per unit) 30 Direct labour/labor (Per unit) 0 ixed factory overhead , 000 Variable factory overhead (Per unit) 18 | Fixed selling expenses ; ng Variable selling expenses (Per unit) ec Fixed Administrative expenses y Compute the BEP sales units and show it graphically. : ot ? Direct materials + Direct fabour + Variable factory overhead + Variable Variable cost per unit = 10 + 60 + 40) = Tk.300. Bae eee Bi ie ornteot a sling eapeis + Fs administrative M2: Bred apenecs Fra 200 + S000) = TE.‘Less : Variable expenses a Contribution margin (CM) 1,20,000 Less : Fixed expenses ‘Net operating income 42.000 Required : i, What is company's CM ratio? ‘What is quarterly break even point in units sold and in sales taka. F i Compute company's margin of safety in taka and in percentage eM: 75,999? 7: ;. How many would have to be sold each quarter to earn a pre-taX PFO" ry 715.000 then what v oy can sell only 6,000 units but wanted to earn a pre tax Pro! # would be the selling price per unit? jn fixed expenses, by how much vi. If sales increase by Tk. 60,000 per quarter and there is no change in would you expect net operating income to increase? >: , oe oun 7 io 7 _Lentribution Margin’ _ Tk.1,20,000 4, T24 _ 9 39 obama” : Sales ~ Tk.400,000 " TE8O si : Fixed cost___ Tk. 78,000 _ 3 RG): BEP Sales (Units) = Gp SAE = TE = 3,250 uni BEP (Tk.) Or, BEP (Tk.) MIS (Tk.) Actual sales — BEP Sales = Tk.4,00,000 — Tk.2,60,000 = Tk. 1,40,000 k) _ Tk.1,40,000 M/S in Percentage (M/S raiio) = Ms Te) BS fe R{iv): Required sales in units to earn a pre tax profit of the 75,000: ; its) = Eixed cost + Desired profit berfore tax Required Sales (units) Contribution per unit _ 7k.(78,000 + 75,000) _Tk.153,000 Tk24 =""Tk24 = 6375 units Reg. sed sales (Tk.) = Required units x Selling price per unit = 6,375 units x 3 80= Tk. 5,10,000 Fixed pl “oe (Or, Required sales (Th.)= ‘ixed cost + Desired profit before tax CM ratio _ Tk.(78,000 + 75,000) _ Tk.153,000 . 030 =""'030 = 7Tk.5,10,000, 135 = 35% RW): W; Calculation of tual sales value to be needed of 6,000 units tocar profit Tk 7: oni Variable cost (6,000 units x Tk.56) ay nr j Fixed cost "78,000 sia coat 4,14,000 Profit ¥ 3 Sales value of 60,000 units «. The selling,eG STRICT CO eas Few Let, sales price = x. Profit = Contribution Or, TK.75,000 Or, Tk.75,000 Or, ~1,800 X OF, 1,800 X = TK.1,53,999 | *75000=-Tk.1.53,000 So. X=" Tg09_ = Tkas, Ck uc jatement —___ Sars were Micka (6,000 units x 81.50) = Tk.4,89,000 (6,000 units x 56) = (3.36,000) —_ aera] (6000 units %85)=TK5,10000 Variable cost Contribution i (6,000 units x 56 Fixed cost its % $6*) = (336,000) Pre tax profit 000) 174,000 Tk.75,000 73.000) | (Bee: 8¢,000 "ea mre fe TN) ound 7.96.00 (Ber: me,c00 m ere eH wen fe aie ea 0 Fe (6,000 units x 85} (5,10,000 « 70%)* 90 en we K5,10,000 G.57.900) | FORT ATT AaASTS HAT CHITA? ye pend eae CM ratio Ce 1 HERTHA AEA ace Fae cre ea EUR A HOT aE AN ATS src 1 efecto aya Few co Dre err Farner era ee, Ps eden a STATS see wo CM ratio ATER ae | wea Fa A oe aH a as ee DE eaten Pama aye PNR 0% (56 + 80 = 0.70) SRE A Fw SF CoM BY (vi): Net operating income increase by increasing sales Tk. 60,000 = Sales increase x CM ratio = Tk.60,000 x 0.30 = Tk.18,000. {erva1 safi, Break even point Se7# cf am sy AA | CAAT, Break even point 4 4 ‘A company plans to produce 60,000 units at a be Tk.9,00.000. The selling price is to give 209 @ PV ratio; i) Break-even point; (ii) PV ratio and break-even point i (iv) The number of units required to be the budgted profit. con Me BS ath Fr HT BAGS Contribution a TR TM “aia cota Fixed cost 137} rach. The fixed costs are expe % profit on cost. You are required to calculate variable cost of Tk.65 the selling price is increased by 15% sold at the reduced selling price to obtain an increase of 159 TKS. = (1k.9,00,000 + 60,000 units) ‘Total fixed cost + Production Variable cost + Fixed Cos tal cost + 20% profit on cost = 7 Tk.65 + Tk:L5) = TK80. ee Tk.80 + Tk 16=TE9%. W-1; Fixed cost per unit e80 + (Th.80 x 20%) W-2: Total cost per unil W-2: Selling price per unitee ! Management Acomfing DEAE Ty 65 = TRI (i) er ee a unit = = Sales per unit ~ Variable cost Per Tk.0.3229 = 29,033 units 900,000 _ 29,032.25806 Tk3l a Ril): Break-even point (units) = ‘Contribution per unit ~ q Req Break-even point (Tk.) _ = BEP (units) x Selling price 097. = 20032.25806 units x TK.96 = TK27.87. RGii): Ee Tioal W-L: New salles price = Tk.96 + (Tk.96 x 15%) = Tk.96 + Tk 14.40= sds 'W-2: New contribution per unit = New sales per unit~ Variable cost per WE _ 4 ay » Riili): = Tk.110.40-Tk65 = Tk.45.40 (or, 31 + 14 , io ae jo = Contribution per unit TkAS40 _ 45g, So, profit: aoe Sales per unit“ Tk.110.40 ae 4 R Fixed cost = 19,823.78855 = 19,824 units eg Break-even point (units) = SSipation per ual Break-even point (Tk. units) x Selling price aad Tso57880 ala 11040 = T2188, S46, Roly): oe lane “réduced selling price” =e “fara selling price <2 a (oe Dre) WT LOR! TEM selling price oe oa ‘Bist 7H & per unit contribution fer Braters CTR AAT BATA FACE WA |] x W-1: Budgted profit = 60,000 units x Tk.16 = Tk.9,60,000 Be oF, (60,000 units x Tk.80 x 20%) = Tk.48,00,000 20% = Tk.9,60,000. oF, {((60,000 units x Tk.96 x 0.3229 - Tk.9,00,000} = Tk.9,60,000. W-2 Target Profit = Budgted profit x 15% = {Tk 9,60,000 + (Tk.9,60,000 x 15%)} = Tk.11,04,000. Fixed cost + Target profit before tax rere aiee (omity): = Per tnt contribution Tk.900,000 + Tk.1104,000._ Tk.20,04,000 = TKS. TK 3g = 64.645. 16 = 64,646 unit Fix Alita Tools Lid. manufactures variety of machine ool. The followings are taker from the bap Sales (6,000 units) a 00 Variable cost 24,004 Fixed cost 16,80,000. i. What is the break-even point in units in 2020? 6,90,000 ii, What sales amount would be necessary to cam an afier- i ; leceate 40 percent? % net income of Tk. 1,80,000, if the incoe ‘What sales amount would be necessary to eam a profit before t iv. What effect would a 5 percent price increase have on the ace. Percent of sales? Wel: Seling price per unit = Sales (Tk.) + Sales units = 11.24,00.090 W-2: Variable cost per unit = Variabie cost (Tk,) + fea were 8000 units) =Tk.400. w. bution per unit. = Sales per unit Vasile cost per unit = 0 0 as) = Ta : , 400 ~Tk 280 = Tk. 120 =5.750 unitseS ————— o> Chagas IS+16) PUES > Cost-Volume-Profit Relationshi tionships 423 Profit volume ratio = Contribution per unit Tk €Sperunit — “Te499=Tk0.30 ‘ Fixed cost + Desited profit after ta Required sales (Tk,), qo GEESE | 690,099 : Pv Ratio — = 970.000 + 3,00,000 7.990000 " 0.30 0.30 = Tk.33,00,000. RO | Let, sales Tk.x. So, profit = X x 20% = X x 0.20 = 0, 20x Required sales (volumesTk.) = Fixed Cost + Desired profit (pre-tax) PV ratio Mi Or, x ¥:£50,000 + 0 Or, 0.30X = Tk.6,90,000 + 0.20x o Or, 0.30X -0.20X = Tk.6,90,000 ae Or, 0.10X = Tk.6,90,000 Tk.690,000 So, X=—T76— = Tk.69,00,000 Riv): W-1: New sales price = Tk.400 + (Tk.400 x 5%) = Tk. 400 + Tk.20 = Tk.420 Or, (Tk-400 x 105 W-2: New contribution per unit = New sales Per unit — Variable cost per unit = Tk.420 - Tk.280 = Tk.i40; Or (Tk.120 + Tk.20) = Tk.140 s Fixed cost___ 690,000 _ 4. =. Break-even point (units) ° = GSipution per unit ~ Tk.140 = 4-929 units Effect: If price increase 15%, BEP of the Co. will reduce by (5,750 — 4,929) 21 units. dget aan ; * oo | _Acompany’s data relating to expected operation forthe coming year a tien below Sales (20,000 units) 56,000 po: Purchase price of product 1,56 Commission 10% on sales “a “60,000 Contribution margin 57,000 Fixed cost 23,000 Bence wer. Each situation is independent The Managing director of the company has some questions for your answer, Each situ ee break-even point? i. What is the company's break-ever ay li ive you a pre-tax profit of Fr eee, i ie eas See a el 2,000 ts and wanted a pre-tax profit of Tk. 32,000, what price the company r ¢ required to earn an after- iv, " Ae Sane price of the product increased by 5%, what volume would be required to . Id ask tinea f tax profit of Tk. 18,0002 Tax rate is 40%q sh) as ies Martagement Accounting (in Englis™ Rii 000, Tosa Considers, Een = TH W-1: Contribution per unit. =~~"Togal gales units 30000 wai : Total Contribution margin ee 0 = 7k.0.25 W-2: Profit volume ratio = SACO)” 12400 Fixed cost $7,000 _ 19,000 units Break-even point (units) = Gonribution per unit — Fixed cost _ Tk.57,000 _ 7, 7,28,000 ‘PV eto "025 reas Fixed cost + Desi it (pre-ta Ri): Required sales (units) = FASE COS A it 757,000 + Tk39,000 _ 196,000 - 32,000 units. 7 Tk.3 7 Break-even point (Tk.) RG): Price would it have to charge (selling price): Let, price would it have to charge (selling price) is Tk. X. Total cost + Desired Profit Sales units Variable cost + Fixed Cost) + Desired Profit ‘Sales units _ {(Purchase price + Commission on sales) + Fixed Cost + Desired Profit Pe Sales units Tk. 156000 + (X x 0.10 x 20000)* + Tk.57000 + Tk.32000 Oke "20000 units Tk.156000 + (0.10X x 20000) + Tk.57000 + Tk.32000 r, X = ES ON Tk.245000 + 2000X So, selling price = So, X = (Tk.2,45,000 Lea pe [eres MR CHORE OTR ef ccoe feaTHRS Vio UHR, BIR ee af Rae afees ‘ of fener ven en we a rset oR ere wn a cS ae arora PUTT X oH FACS I a eae Faee ef (X X 0.10) Bret 1 Swe, 20,000 “ x (X x 0,10 x 20,000) BF) 20,000 rece Fara aR Riv): W-L: Sales per unit = (Tk.2,40,000 + 20,000 units) = Tk. 12 W-2: New purchase price per unit = {(Tk.1,56,000 + 20,000 units) + 5%} Tk 7.80 + (Tk7.80 x 5%) = Tk7.8 (Purchase rice + Commission on med ere 9+ (Tk.12 x 10%)} = W-4: New contribution per unit = (Sales ~ Variable cost) Rae Tk.1.20 } _ Petunit contribution Tk.2.61 2—Tk.9.39) Sales per unit ="TK12 = Tk0.2175 Fined cost + Pesited profit after tax Required sales (Tk.) =a 57,000 +~18:000_ (O40)? 5 =a = + 18.000 | 1.75000 W-3: Total variable cost per unit W-5: Profit volume ratio RQ) RG) R@) R¢ = 22od ae, 7 s a 425, Accompany is ablet ae cost per year Tk. 2-10,004,"% OMY Product for Tk. 40 You are Require to calculate 4. Break even sales in units » Break even point in Tk. PV Ratio. ‘What number of un is Wi Of units will need to be sold to cam a total profit of Tk. 70,000 and Tk. 1,05,000, If taxation rate is 40% Y units need to be sold to make a profit of Tk. 84,000 after tax is 40% how many units need Id to make a profi Because of inflationa lationary trend, variable cost expected to rise by 1 be sang lf the selling price cannot be increased, what wi be the eek arse cost Te Per unit. Variable cost per unit Tk. 26, Total fixed avaw be-sold to maintain the pre-tax profit of Tk. 10.000, eee W: Contribution per unit = (Sales per unit ~ Variable cost per unit) = Tk(40 -26) = Tk 14 — _ __ Fixed cost 7K210,000 Break even sales (in unit) = “Gosrbuon poy Ua = ag = 15:00 units > RQ): Break even sales (in Tk.) = BEP (in units) x Selling price per unit 000 units x Tk. 40= Tk. 6,00,000 : _Contribiution per unit Tk.14 RG): PV Ratio=""'Sales per unit. = Tk40 ced cost + Desired profit Contribution per unit R(4): Required Sales (in units) Tk.(210,000 + 70,000) (a) When desired profit Tk.70,000:Required Sales (in units) ==" 53——— = 20,000 Units < : Tk(210,000 + 105,000) (b) When desired profit Tk. 1,05,000:Required Sales (in units) =, 5 Desired profit 74 919,999 4 TH84,000 Pied Soenooe (iaTax) C-0.40) R(5): Required Sales (in units) = —Comeibution per unit = Tis Tk.210,000 + 140000 _Tk.3,50,000 _ eet eid = 25.000 units we Sales per unit ~ Variable cost per unit) = Tk.(40~(26 + 2)} = Tk-12 W-1; New contribution per unit Or, (Tk.14 ~ Tk.2) = Tk 12. = 0 2: Ne Tk.2,10,000 + 17,000) = Tk.2,27,000 ee Fixed cost + Desired pro New Required sales (in units) =" New contribution per unit a Tk.(227,000 + 70,000) x Tk. sare = 24,750 units. 'V = 30%. A decrease of ;, 4,60,000 and a margin of safety 40% and P\ . The Abo Comoapy hs mle of 0 angst 98 ams PV 1029 % fixed expen! ired : s ce By what amount did sales decrease? ‘What is the new: BEP?hanged: sales price decrease but sales units remain VC ratio = 1 PV rato) = (1-030) 070 4 eat ~ Presemt variable cost = Tk.4,60,000 x 0.70 = Tk.3.224 ales units a it New VC ratio = (1 — PV ratio) = (10.25) =075 3,22.000 (beeen teg afaréarAte I Crem, We: New variabl Present variable cost = Tk3.22,008 | Vatble coat rommin unchangedtcy Rat e047 100% or 1 = new sales BHR, Stone ewe aH) -73,22,000, $0. | W-5: According to the question, 0.75 (in the new case) = Tk3- “ Varia TH3.20000 7 2933 Fs “e 7. tio) Total New BED nse TK (4,60,000 —4,29,393) = ThI0.667. New MS ra ata Pal RGi): New BEP= New Sales — New MS sale. Soret ro 333 - Tk-1,50,267 a 2,79, 7 333 x 0.35) = Th 2099 2 Tk37.56 s New profit = New MS sales x New PV ratio = (Tk. 1,50,267 x 0.2: (ill): New profit = New MS sales x New PV rati The Ro 9 x PV ratio W-l: Previous profit = Previous Sales x Previous Profit ratio = Sales x MS ratio > Te. 460,000 x (040%0.30)=TK55200 os previous PV W-2: Previous fixed cast = Previous Contribution — Prevoious profit = ratio ~ Prevoius profit 7 Oe TK (4,60,000 x 0.30) - Tk.55,200 = Tk. 138,000 - Tk 55,200 = Tk. ee New pect 'W-3: New fixed cost = New Contribution — New profit = New Sales x New ie I ‘Tk. (4,29,333 x 0.25) - Tk. 37,567 = Tk.1,07,333 — Tk37,567 = Tk.69,766. So, fixed cost decreased by Tk.(82,800 — 69,766) = Tk.13,034. een {bul Traders produces and sells 22,000 units product. The data relating to production and sales are as follows Taka Direct raw materials 1,10,000 Direct wages 66,000 a Variable factory overhead 44,000 Variable marketing and administrative expenses 22.000 Fixed factory overhead 36,000 Fixed marketing and administrative expenses 44,000 Requirement : i, Calculate BEP in units and in taka if selling Price per unit is Tk. 15 ii, Determine the number of units that must be sold at a selling nrc 3 fee om Brice of TE. 16 ifthe company would like til, Determine th sales price that must be charged toils product in order to eam 10% 25,000 units” level % profit on sales at R W-l: Total variable cost = T:(1,10,000 + 6,000 + 4,000 +29 999, - O + 22,000) = Tk.2,49 oy Variable cost per unt «Ota! Variable Cost 000 722.000 2 Vatiable-coe: permit Fo are 22,000 units ¥-3 Conruton per unit. = Sales per uit Variable cost pe - : W3; Tota fixed cost = k,(36,000 + 44,000) = Tx. aon a = = Fixed cost Tk.80,000 . (in units) = “Per unit contribution = Tk4 = 20,000 units, i>? (in taka) = BEP units x Seling price per uni 20,000 ‘mis xTK15 = 743 00,000,