FINANCIAL REPORTING, STATEMENTS AND ANALYSIS

Professor: Dr.Arpit Sidhu

FIXED COSTS:
• Fixed costs refer to expenses that a company must pay, independent of any specific
business activities.
• These costs are set over a specified period of time and do not change with
production levels.
• Fixed costs can be direct or indirect and may influence profitability at different
points on the income statement.

FIXED COST OF SUBROS COMPANY

FIXED COSTS (lakhs)

PARTICULARS 2021 2020 2019

Salaries ,wages and bonus 5,919.00 18,103.36 17,714.86

contribution to pf 813.29 855.71 764.59

gratutity 257.66 239.63 164.77

staff welfare expense 1,080.75 1,528.39 2,013.22

Depreciation and amortisation 9,210.77 9,030.44 7,884.74

audit fees 46.42 54.32 56.72

rent 304.03 276.46 574.02

rates taxes and fees 55.65 65.49 40.61

insurance 499.90 462.11 410.05

royalty 1,984.86 2,092.69 1,908.74

legal and professional charges 444.21 458.73 400.30

total 20,616.54 33,167.33 31,932.62

VARIABLE COSTS:

• A variable cost is an expense that changes in proportion to production output or

sales.
• When production or sales increase, variable costs increase; when production or
sales decrease, variable costs decrease.
• Variable costs stand in contrast to fixed costs, which do not change in proportion to
production or sales volume.

VARIABLE COSTS OF SUBROS COMPANY

VARIABLE COSTS (lakhs)

PARTICULARS 2021 2020 2019

raw materials purchased 130354.78 1,40881.50 1,48,503.32

consumption of stores 3,568.49 3,851.75 4,542.80

power and fuel 2,772.14 2,902.38 3,231.32

repairs and maintainence of building 353.77 366.62 405.45

repairs and maintainence of p&m 1,343.53 1,300.97 1,501.93

repairs and maintainence of others 192.34 275.43 288.16

selling and distribution expense 2,566.30 2,953.16 3,946.35

vehicle and running expense 129.48 159.69 204.58

travelling and conveyance 148.42 464.19 682.08

miscellaneous expenses 1,564.79 2,358.18 1,951.64

total 142994.04 1,55,513.87 1,65,257.63

COST SHEET OF SUBROS COMPANY:
AMOUNT (LAKHS)

PARTICULARS 2021 2020 2019

Direct materials 1,30,354.78 1,40,881.50 1,48,503.32

direct labour 9,376.18 10,363.55 10,328.72

direct expense 4,757.00 4,995.07 5,140.06

prime cost 1,44,487.96 1,56,240.12 1,63,972.10

add: factory overheads 26,469.46 28,351.00 27,928.12

gross work cost 1,70,957.42 1,84,591.12 1,91,900.22

add:opening wip 1,617.87 1,442.74 1,548.36

less:closing wip 2,689.46 1,617.87 1,442.74

works cost 1,69,885.83 1,84,415.99 1,92,005.84

add: office and administrative overheads 639.05 977.24 1,139.10

cost of production 1,70,524.88 1,85,393.23 1,93,144.94

add: opening finished goods 625.43 708.42 505.27

less:closing finished goods 893.79 625.43 708.42

cost of goods sold 1,70,256.52 1,85,476.22 1,92,941.79

add:selling and distribution overheads 2,695.78 3,112.85 4,150.93

cost of sales 1,72,952.30 1,88,589.07 1,97,092.72

profit 6,579.94 10,690.87 15,346.77

sales 1,79,532.23 1,99,279.93 2,12,439.49

WORKING NOTES:
1

LABOUR 2021 2020 2019

Salaries ,wages and bonus 5,919.00 18,103.36 17,714.86
contribution to pf 813.29 855.71 764.59
gratutity 257.66 239.63 164.77
staff welfare expense 1,080.75 1,528.39 2,013.22
TOTAL 8,070.70 20,727.09 20,657.44
*AS THE LABOUR EXPENSE IS NOT DIVIDED AS DIRECT AND INDIRECT WE ASSUME 50 %AS
DIRECT AND 50% INDIRECT EXPENSE.
2

direct expenses 2021 2020 2019

power and fuel 2772.14 2902.38 3231.32

royalty 1984.86 2092.62 1908.74

total 4757 4995 5140.06

FACTORY OVERHEADS 2021 2020 2019

rent 304.03 276.46 574.02

insurance 499.90 462.11 410.05

rates taxes and fees 55.65 65.49 40.61

Depreciation and amortisation 9,210.77 9,030.44 7,884.74

consumption of stores 3,568.49 3,851.75 4,542.80

miscellaneous expenses 1,564.79 2,358.18 1,951.64

repairs and maintainence of building 353.77 366.62 405.45

repairs and maintainence of p&m 1,343.53 1,300.97 1,501.93

repairs and maintainence of others 192.34 275.43 288.16

indirect labour 9376.175 10363.545 10328.72

total 26,469.45 28,351.00 27,928.12

4

Office and administrative expenses 2021 2020 2019

audit fees 46.42 54.32 56.72

legal and professional charges 444.21 458.73 400.30

travelling and conveyance 148.42 464.19 682.08

total 639.05 977.24 1,139.10

selling and distribution expenses 2021 2020 2019

selling and distribution expense 2,566.30 2,953.16 3,946.35

vehicle and running expense 129.48 159.69 204.58

total 2,695.78 3,112.85 4,150.93

1.PV RATIO : (AMOUNT IN LAKHS)

PV RATIO = CONTRIBUTION/SALES*100

CONTRIBUTION = SALES -VARIABLE COSTS

PARTICULARS 2021 2020 2019

CONTRIBUTION= 179532.23 - 199279.93-155513.87= 212439.49-
SALES -VARIABLE COST 142994.04=36538.19 43766.12 165257.63=47181.86

PV RATIO =
CONTRIBUTION/ SALES 36538.19/179532.23 43766.12/199279.93 47181.86/212439.49
*100 *100 =20.35% *100 = 21.93 % *100 =22.21%

2.BREAK EVEN SALES = FIXED COST / PV RATIO

PARTICULARS 2021 2020 2019

BREAK EVEN SALES= 20616.54/20.35% 33167.33/21.93% = 31932.62/22.21%
FIXED COST / PV =101309.8 151241.82
=143775.87
RATIO

**AS THE SALES PER UNIT AND COST PER UNIT ARE NOT DEFINED THE BREAK EVEN SALES ARE
AVAILABLE IN AMOUNT DUE TO INSUFFICIENT DATA AND THIS IS THE VALUE OF SALES WHERE
COMPANY IS IN POSITION OF NO PROFIT AND NO LOSS.

3.MARGIN OF SAFETY = ACTUAL SALES – BREAK EVEN SALES

PARTICULARS 2021 2020 2019

MARGIN OF SAFETY= 142994.04-101309.8 199279.93-151241.82 212439.49-143775.87
ACTUAL SALES – =41684.24 =48038.11 =68663.62
BREAK EVEN SALES
THANK YOU
FOR
GIVING THIS
OPPURTUNITY

CHAITANYA GEMBALI
REGD NO -12110744
ROLL NO -RQ2153B39