Assignment Questions - MARGINAL COSTING

Assignment Questions

 

MARGINAL COSTING

 

Question 1. A company has a P/V ratio of 40%. Selling price Rs.100,  By what percentage must sales be increased to offset: 20% reduction in selling price?

 

Question 2. If P/V ratio is 60% and the Marginal cost of the product is Rs.20. What will be the selling price?

 

Question 3. ABC Ltd sells a single product for Rs. 9 per unit. The variable cost is Rs. 6 per unit and the fixed cost total Rs. 54,000 per month. In a period when the actual sales were Rs.1,80,000, ABC Ltd. Find Margin of Safety in units.

 

Question 4. A company produces single product which sells for Rs. 20 per unit. Variable cost is Rs. 15 per unit and Fixed overhead for the year is Rs. 6,30,000.  Calculate sales value needed to earn a profit of 10% on sales.

 

Question 5. A company has fixed cost of Rs. 90,000, Sales Rs. 3,00,000 and Profit of Rs. 60,000.

Required:

(i) Sales volume if in the next period, the company suffered a loss of Rs. 30,000.

(ii) What is the margin of safety for a profit of Rs. 90,000?

 

 

Question 6. Product Z has a profit-volume ratio of 28%. Fixed operating costs directly attributable to product Z during the quarter II of the financial year2009-10 will be Rs.2,80,000. Calculate the sales revenue required to achieve a quarterly profit of Rs. 70,000.

 

Question 7. Following informations are available for the year 2008 and 2009 of PIX Limited:

Year                            2008                2009

Sales               Rs. 32, 00,000            Rs. 57, 00,000

Profit/(Loss)    (Rs. 3,00,000)             Rs. 7, 00,000

 

Calculate –(a) P/V ratio, (b) Total fixed cost, and (c) Sales required to earn a Profit of

Rs. 12,00,000.

 

Question 8. MNP Ltd sold 2,75,000 units of its product at  Rs.37.50 per unit. Variable costs are Rs.17.50 per unit (manufacturing costs of  Rs.14 and selling cost Rs.3.50 per unit). Fixed costs are incurred uniformly throughout the year and amount to Rs.35,00,000 (including depreciation of Rs.15,00,000).There are no beginning or ending inventories.

Required:

(i) Estimate breakeven sales level quantity and cash breakeven sales level quantity.

(ii) Estimate the P/V ratio.

(iii) Estimate the number of units that must be sold to earn an income (EBIT) of Rs.2,50,000.

(iv) Estimate the sales level achieve an after-tax income (PAT) of  Rs.2,50,000. Assume 40% corporate Income Tax rate.

 

 

 

 

ANSWER HINTS
Question No.	Answer
1	Rs.100 to Rs.160
2	Rs.50
3	2000 units
4	Rs. 42,00,000
5	i. Rs. 1,20,000.; ii. Rs. 1,80,000.
6	Rs.12,50,000
7	a. 40%; b. Rs.15, 80,000; c. Rs.69, 50,000
8.	i. 1,75,000 units; ii. 53.33 %; iii. 187500 units; vi.Rs.73,43,750/-