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    Cost and Managerial Accounting: Assignment 2

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    haseeb shaikh
    The document contains sample accounting questions and solutions related to cost and managerial accounting concepts like breakeven point, contribution margin, fixed and variable costs, and margin of safety. Question 1 calculates breakeven point in units. Question 2 proves a given breakeven point using revenue and expenses. Question 3 calculates fixed expenses, sales, variable expenses, and margin of safety ratio from financial data. Question 4 computes breakeven sales, margin of safety in rupees and percentage, and minimum units to breakeven for a company.

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    Cost and Managerial Accounting: Assignment 2

    Uploaded by

    haseeb shaikh
    409 views5 pages
    The document contains sample accounting questions and solutions related to cost and managerial accounting concepts like breakeven point, contribution margin, fixed and variable costs, and margin of safety. Question 1 calculates breakeven point in units. Question 2 proves a given breakeven point using revenue and expenses. Question 3 calculates fixed expenses, sales, variable expenses, and margin of safety ratio from financial data. Question 4 computes breakeven sales, margin of safety in rupees and percentage, and minimum units to breakeven for a company.

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    accounting

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    The document contains sample accounting questions and solutions related to cost and managerial accounting concepts like breakeven point, contribution margin, fixed and variable costs, and margin of safety. Question 1 calculates breakeven point in units. Question 2 proves a given breakeven point using revenue and expenses. Question 3 calculates fixed expenses, sales, variable expenses, and margin of safety ratio from financial data. Question 4 computes breakeven sales, margin of safety in rupees and percentage, and minimum units to breakeven for a company.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    409 views5 pages

    Cost and Managerial Accounting: Assignment 2

    Uploaded by

    haseeb shaikh
    The document contains sample accounting questions and solutions related to cost and managerial accounting concepts like breakeven point, contribution margin, fixed and variable costs, and margin of safety. Question 1 calculates breakeven point in units. Question 2 proves a given breakeven point using revenue and expenses. Question 3 calculates fixed expenses, sales, variable expenses, and margin of safety ratio from financial data. Question 4 computes breakeven sales, margin of safety in rupees and percentage, and minimum units to breakeven for a company.

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    30 –MAR 2020

    COST AND MANAGERIAL


    ACCOUNTING
    Assignment 2
    Q: 1
    Calculate the breakeven point in units when:

    Sales price Rs.1 each


    Sales Rs.60,000
    Variable cost (0.5 per unit) Rs.30,000
    Fixed cost Rs.20,000

    SOLUTION:
    FIRST WE FIND CM PER UNIT TO CALCULATE BREAKEVEN SALES IN UNIT
    FORMULAE:
    CM per unit = Sale per unit - Variable cost per unit
    CM per unit = 1 – 0.5
    CM per unit = 0.5

    NOW WE FIND BREAKEVEN SALES IN UNIT


    FORMULAE:
    Breakeven Sales in unit = Fixed cost
    CM per unit
    Breakeven Sales in unit = 20,000
    0.5
    Breakeven point in unit = 40,000

    Q:2
    By matching Revenue & Expenses prove that 7,000 units are
    breakeven point

    Variable cost Rs.10 per unit


    Fixed cost Rs.42,000
    Sales price Rs.16 per unit
    Breakeven point 7,000 units

    SOLUTION:
    FIRST WE FIND CM PER UNIT TO CALCULATE BREAKEVEN
    SALES IN UNIT
    FORMULAE:
    CM per unit = Sale per unit - Variable cost per unit
    CM per unit = 16 – 10
    CM per unit = 6

    NOW WE PROVE THAT 7000 IS BREAKEVEN POINT


    FORMULAE:
    Breakeven Sales in unit = Fixed cost
    CM per unit
    Breakeven Sales in unit = Fixed cost
    CM per unit
    Breakeven Sales in unit = 42,000
    6
    Breakeven point in unit = 7,000 PROVED

    Q;3
    The following data has been taken out from the record of Osman
    Bros., based on the financial result for the year ending 30th June
    2008:
    Breakeven sales Rs.20,00,000
    Contribution margin ratio 40%
    th
    Profit for the year ending 30 June 2008 Rs.3,20,000

    Required:
    Calculate the following:
     Fixed expenses for the year.
     Sales for the year
     Variable expenses for the year
     Margin of safety ratio.

    SOLUTION:

    1. Find Fixed expenses for the year by using Breakeven sale in


    amount
    FORMULA:
    Breakeven Sales in amount = Fixed Cost
    CM%
    2,000,000 = Fixed Cost
    40%
    2,000,000 x 40% = Fixed Cost
    Fixed Cost = 8,00,000
    2. Find Sale for the year by using Sales
    FORMULA:
    Sales are required to earn profit (Rs.) = Fixed Cost + Profit
    CM%
    Sales are required to earn profit (Rs.) = 8,00,000 + 3,20,000
    40%
    Sales are required to earn profit (Rs.) = 2,800,000

    3. Find Variable expenses for the year by using CM ratio


    FORMULA:

    Contribution margin ratio (CM%) = Sales – variable cost x 100


    Sales
    40% = 2,800,000– variable cost x 100
    2,800,0000
    40% x 2,800,000 = 2,800,000– variable cost x 100
    1,120,000 = 2,800,000– variable cost x 100
    1,120,000 – 2,800,000 = – variable cost x 100
    -1,680,000 x 100 = – variable cost
    Variable cost = 168,000,000

    Q;4
    R Company has prepared the following projections for the coming
    year 2008:
    Rs.
    Sales 150,000
    Variable cost 112,500
    Contribution margin 37,500
    Fixed cost 20,000
    Net income 17,500

    Required:
    Compute the following:
    Breakeven sales in rupees.
    Margin of safety in rupee and in percentage.
    A minimum unit to be sold to breakeven, if the sale price is
    Rs.15/unit
    SOLUTION:

    1. Find breakeven sales in rupees by using Breakeven sale in amount


    FORMULA:
    FIRST WE FIND CM%
    Contribution margin ratio (CM%) = Contribution margin x 100
    Sales
    Contribution margin ratio (CM%) = 37,500 x 100
    1,50,000
    Contribution margin ratio (CM%) = 25

    NOW WE FIND BREAK EVENSALES IN AMOUNT


    Breakeven Sales in amount = Fixed Cost
    CM%
    Breakeven Sales in amount = 20,000
    25%
    Breakeven Sales in amount = 80,000

    2. Find Margin of safety in rupee and in percentage by using Margin


    of safety or ration
    FORMULAE;
    Margin of safety = Budgeted sales revenue – Breakeven sales revenue
    Margin of safety = 1,50,000 – 80,000
    Margin of safety = 70,000
    Margin of safety ratio (%) = Budgeted sales revenue – Breakeven sales revenue x 100
    Budgeted sales revenue
    Margin of safety ratio (%) = 1,50,000 –80,000 x 100
    1,50,000
    Margin of safety ratio (%) = 46.66%

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