Cost Volulme Profit Analysis (CVP Analysis)

1.Variable Cost of a Product is Rs. 25, Selling Price is

Rs. 45 and Fixed cost is Rs. 10 lacs per annum.
Calculate the Break Even Point. What will be the
margin of safety if current sales are at 80,000
Units? Calculate all parameters in number of units
as well as Rupees.

2.Radhika Pvt Ltd produces a product ‘R’. The unit

selling price and variable cost per unit is Rs. 1,000
and Rs. 750 respectively. Fixed cost is Rs.
25,50,000 p.a.
a. Calculate Break- even point of the company.
b. Also, determine the expected sales if desired
profit is Rs. 7,50,000.

3. For a particular period, Sales amounts to Rs.

2,00,000 and net profit is Rs. 20,000. Fixed cost is
Rs. 30,000. Calculate
a. P/V ratio
b. Profit when sales will be 3,00,000.
c. Sales to earn profit of Rs. 30,000.
d. Contribution when sales will be Rs. 1,50,000.
e. Variable costs, for sales of Rs. 2,00,000.

4. From the following data calculate P/V ratio.

Year Sales Total Cost

2019 1.00 0.80
2020 1.20 0.90
5. A product is sold at a price of Rs. 100 per unit and
its variable cost is Rs. 80 per unit. The fixed cost
of the business are Rs. 10,000. You are required to
calculate (i) BEP in units (ii) BEP in values.

6. The Asian Industries specifies in manufacture of

small Toys. The cost structure of a toy is as under.
Material – Rs. 80
Labour – Rs. 50
Variable overheads – 75 % of labour cost.
Fixed overheads of the company amounts’ to Rs.
240000 p.a. The sale price of the toy is Rs. 230
each. Determine the number of Toys to be
manufactured and sold in a year in order to
achieve Break even? How many toys have to be
made and sold in order to achieve profit of Rs.
1,00,000.

7. Following information is available in respect of G

Ltd. and D Ltd.

Particulars G Ltd (Rs.) D Ltd (Rs.)

Sales 11,00,000 14,00,000
Variable cost 8,80,000 10,50,000
Profit 1,20,000 2,00,000
 Calculate:
i. P/V ratio.
ii. Fixed cost of both companies
iii. Break – even point of both companies
iv. Sales to earn profit of Rs. 2,10,000 by each
company.
v. Margin of safety of ‘D’ Ltd.

8.The price structure of a cycle made by the Cycle

Company Ltd. is as follows:
Materials : Rs. 60
Labour : Rs. 20
Variable Overheads : Rs. 20
Fixed Overheads : Rs. 50
Profit : Rs. 50
Selling Price Per Cycle : Rs. 200
Currently company is producing one-lakh cycles
per annum. The company expects that due to
competition, they will have to reduce the selling
prices, but they want to keep the total profits
intact. What level of production will have to be
reached, i.e., how many cycles will have to be
made to get the same amount of annual profit if:
(a) The selling price is reduced by 10%.
(b) The selling price is reduced by 20%.