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Cost Volume Profit Analysis Problems PDF

The document contains 4 cost-volume-profit analysis problems and their solutions. Problem 1 asks about determining the break-even point in units for a panel formwork supplier business. Problem 2 asks about determining the break-even point in rupees for a women's shoe franchise. Problem 3 asks about determining the monthly break-even volume for a manufacturing company. Problem 4 contains multiple parts asking about determining break-even points for a t-shirt store under different scenarios concerning fixed costs, desired profit levels, and selling prices.

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Inah Salcedo
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914 views3 pages

Cost Volume Profit Analysis Problems PDF

The document contains 4 cost-volume-profit analysis problems and their solutions. Problem 1 asks about determining the break-even point in units for a panel formwork supplier business. Problem 2 asks about determining the break-even point in rupees for a women's shoe franchise. Problem 3 asks about determining the monthly break-even volume for a manufacturing company. Problem 4 contains multiple parts asking about determining break-even points for a t-shirt store under different scenarios concerning fixed costs, desired profit levels, and selling prices.

Uploaded by

Inah Salcedo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Cost Volume Profit Analysis Problems PDF Unit 6

Cost-Volume-Profit Analysis Problems and Solutions

Problem # 1: Assume that as an investor, you are planning to enter the construction industry as a panel formwork supplier.
The potential number of forthcoming projects, you forecasted that within two years, your fixed cost for producing formworks
is Rs. 300,000. The variable unit cost for making one panel is Rs. 15. The sale price for each panel will be Rs. 25. If you
charge Rs. 25 for each panel, how many panels you need to sell in total, in order to start making money?

Solution:

Answer: Break-Even in Units = 30,000 panels

Problem # 2: Suppose you intend to open a franchise business to supply a nationally-known line of women’s shoes. You’ve
found a good location in Abbottabad to open your shop, and have determined that the average prices and costs of operating
the store are:
Price = Rs. 50 per pair Cost = Rs. 30 per pair
Rent = Rs. 2,500 per month Insurance = Rs. 500 per month
Utilities & Telephone = Rs. 300 per month

In addition, you plan to hire two sales ladies on a commission basis of 10% in order to provide them with incentive to sell
shoes. You are required determine the breakeven point in Rupees?

Solution

Answer: Break-Even in Rupees = Rs. 11,000

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Cost Volume Profit Analysis Problems PDF Unit 6

Problem # 3: A manufacturing company supplies its products to construction job sites. The average monthly fixed cost per
site is Rs. 4,500, while each unit cost Rs. 35 to produce and selling price is Rs. 50 per unit. Determine the monthly breakeven
volume.

Solution

Answer: Break-Even in Volume = 300

Problem # 4: A store sells t-shirts. The average selling price is Rs. 15 and the average variable cost (cost price) is Rs. 9.
Thus, every time the store sells a shirt it has Rs. 6 remaining after it pays the manufacturer. This Rs. 6 is referred to as the
unit contribution.

(a) Suppose the fixed costs of operating the store (its operating expenses) are Rs. 100,000 per year. Find Break-even in
units?

Solution:

Answer: Break-Even in Units = 16,667 T-shirts

(b) If the owner desired a profit of Rs. 25,000, what will be break-even point in Rupees?
Solution

Answer: Break-Even in Rupees = 16,667

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Cost Volume Profit Analysis Problems PDF Unit 6

(c) If fixed costs rose to Rs. 110,000, break-even in units volume would be?
Solution

Answer: Break-Even in Units = 18,333 T-shirts

(d) If the average selling price rose to Rs.16, break even volume would fall?
Solution

Answer: Break-Even in Volume = 14,286 T-shirts

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