UNIT-II: MARGINAL COSTING

Concept of marginal cost and marginal costing; Absorption versus

Variable Costing: Distinctive features and income determination; Cost-
volume-profit analysis; Break-even analysis - mathematical and graphical
approaches; Profit-volume ratio, angle of incidence, margin of safety,
Cash break-even point and Composite break-even point, determination of
cost indifference point.

MEANING & CONCEPT OF MARGINAL COST

Marginal cost is the variable cost comprising prime cost and variable
overheads. It may be defined as “the amount at any given volume of output
by which the aggregate costs are changed if the volume of output is
increased or decreased by one unit”.

The term Marginal cost is used in two meanings. According to first

meaning Marginal Cost refers to Variable Cost. Variable Cost consist of
direct materials, direct labour, variable direct expenses and all variable
overheads, In short, marginal cost is taken as equal to prime cost plus all
variable overheads. In other meaning, variable cost is considered in a
specific sense, i.e., increase or decrease in total cost on account of increase
or decrease of output by one unit.

Marginal Cost = Prime Cost + All Variable Overheads

Or
= Direct Material+Direct Labour + Direct Expenses + All Variable
Overheads
Or
= Total Cost-All Fixed Overheads
Or
= Total Cost- (Fixed Works Expenses + Fixed Office Expenses + Fixed
Selling and Distribution Expenses)
CONCEPT OF MARGINAL COSTING

Marginal costing is also known as “Direct costing or Variable Costing”.

Some of its definitions are as follows

Variable Costing is defined by CIMA London as “The accounting

system in which variable costs are charged to cost units and fixed cost of
the period are written off in full against the aggregate contribution. Its
specific value is in decision making”.

“Marginal costing is a costing method which charges the product with

only those costs that vary directly with volume”. ---- Matz, Curry & Frank

“Marginal costing is a technique of determining the amount of change

in aggregate cost due to an increase in one unit over the existing level of
production”. ---D.Joseph

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 ABSORPTION COSTING VERSUS VARIABLE COSTING

Absorption costing Marginal costing

Both fixed and variable costs are Only variable costs are considered
considered for product costing and for product costing and inventory
inventory valuation. valuation.
Fixed costs are charged to the cost of Fixed costs are regarded as period
production. Each product bears a costs. The Profitability of different
reasonable share of fixed cost and thus the products is judged by their P/V
profitability of a product is influenced by ratio.
the apportionment of fixed costs.
Cost data are presented in conventional Cost data presented highlight the
pattern. Net profit of each product is total contribution of each product.
determined after subtracting fixed cost
along with their variable costs.
The difference in the magnitude of opening The difference in the magnitude of
stock and closing stock affects the unit cost opening stock and closing stock
of production due to the impact of related does not affect the unit cost of
fixed cost. production.
In case of absorption costing the cost per In case of marginal costing the
unit reduces, as the production increases cost per unit remains the same,
as it is fixed cost which reduces, whereas, irrespective of the production as it
the variable cost remains the same per is valued at variable cost.
unit.
FEATURES OF MARGINAL COSTING

The essential characteristics and mechanism of marginal costing

technique may be summed up as follows

1. Segregation of cost into fixed and variable cost. In variable

costing all cost, are classified into fixed and variable. Semi variable
cost are also segregated into fixed and variable elements.
2. Variable cost as products cost. Only marginal or variable cost are
charged to products produced during the period.
3. Fixed costs as period costs. Fixed costs are treated as period costs
and are charged to costing profit and loss account of the period in
which they are incurred.
4. Valuation of inventories: The work in progress and finished goods
are valued at marginal cost only.
5. Contribution is the differences between sales value and variable
cost of sales. The relative profitability of products or departments is
based on a study of contribution made by each of the products or
departments.
6. Determination of price: Selling price is determined on the basis of
marginal cost-plus contribution
7. Calculation of profit: Profit is determined in a special manner. Total
marginal cost is deducted from total sales revenue and the balance

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 is known as contribution. Thereafter, fixed cost is deducted from
contribution and the results amount is known as profit.
8. Recovery of costs: Only variable costs are charged to production
cost. Fixed costs are recovered from contribution.
9. Break-Even Analysis: Break-Even Analysis or Cost-Volume Profit
analysis is an integral part of marginal costing.

INCOME DETERMINATION UNDER VARIABLE COSTING

Income statement under variable costing is prepared in the

following format:
Income statement (Variable Costing)
Particulars Amount Amount
Sales XXXX
Variable Manufacturing Costs
Direct Materials XXX
Direct Labour XXX
Variable Factory Overheads XXX
Cost of Goods Produced XXXX
Add: Opening Stock of Finished Goods (valued at XXX
variable cost of Previous Period)
Cost of Goods Available for Sale XXXX
Less: Closing Stock of Finished Goods (Valued at XXX
Current Variable Cost)
Cost of Goods Sold XXXX
Add: Variable Administration, Selling & Distri. XXX
Overheads
Total Variable Cost XXXX
Contribution (Sales-Total Variable Cost) XXXX
Less: Fixed Costs (Production, Admin, Selling & XXX
Distri. Overheads)
Net Profit XXXX
COST-VOLUME PROFIT (CVP) ANALYSIS

CVP analysis is a powerful tool of profit planning. It studies the inter-

relationship of three basic factors of business operations:

a. Cost of production
b. Volume of Production/sales, and
c. Profit

These three factors are interconnected in such as way that they act
and react on one another because of cause-and-effect relationship amongst
them. The selling price also affects the volume of sales which directly
affects the volume production and volume of production in term influences

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cost. An understanding of CVP analysis is extremely useful to management
in budgeting and profit planning. It explains the impact of the following on
the net profit;

a. Changes in selling price

b. Changes in volume of sales
c. Changes in variable cost
d. Changes in fixed cost

In fact, CVP analysis helps in determining the probable effect of

change in any one of these factors on the remaining factors.

BREAK-EVEN ANALYSIS

Break-even analysis is a widely used technique to study the CVP

relationship. It is integrated in narrow as well as broad sense.

Narrow meaning: in its narrow, break-even analysis is concerned with

determining break-even point, i.e., that level of production and sales where
there is no profit and no loss. At this point total cost is equal to total sales
revenue.

Broad meaning: When used in broad sense, break-even analysis is used

to determine probable profit/loss at any given level of production/sales. It
also helps to determine the amount or volume of sales to earn a desired
amount of profit.

Assumptions underlying Break-Even Analysis and CVP Analysis

The break-even analysis is based on the following assumptions:

 All costs can be separated into fixed and variable components.

 Variable cost per unit remains constant and total variable cost varies
in direct proportion to the volume of production.
 Total fixed cost remains constant.
 Selling price per unit does not change as volume changes.
 There is only one product or multiple products, the sales mix does
not change. In other words, when several products are being sold,
the sale of various products will always be in some predetermined
proportion.
 There is synchronisation between production and sales. In other
words, volume of production equals volume of sales.
 Productivity per worker does not change.
 There will be no change in the general price level.

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CONTRIBUTION

Contribution represents the difference between sales and variable

costs. Contribution is also known as “Contribution Margin or Gross Margin”.
Thus, contribution is calculated by the following formula:

Contribution = Sales – Variable cost (C = S – V)

Also,

Contribution = Fixed cost + Profit (C = F + P)

or Contribution = Fixed cost – Loss (C = F - L)

From this the following marginal cost equation is developed:

S–V=F+P

Illustration 1

Calculate contribution in each of the following independent situations:

i) Fixed Cost Rs.8,000/-, Profit Rs.5,600/-

ii) Variable cost Rs.7,000/-, Sales Rs.11,000/-
iii) Contribution per unit Rs.7/-, profit Rs.3,000/-, BEP 2,000 units.

PROFIT-VOLUME RATIO (P/V RATIO)

This ratio is a very useful as it indicates profitability of the concern.

It establishes the relationship between contribution and sales usually
expressed a percentage. This ratio is known as “Marginal -Income ratio,
Contribution-Sales ratio or Variable -Profit ratio”. This ratio is calculated as
under;

P/V Ratio =Contribution X 100

Sales
OR
P/V Ratio = Sales-Variable Cost X 100
Sales
P/V Ratio = Net Profit X 100
Margin of Safety

P/V Ratio = Change in Profits X 100

Change in Sales
Uses of P/V ratio

P/V ratio is one of the most important ratios to watch in business. It

is an indicator of the rate at which profit is being earned. A high P/V ratio
indicates high profitability and a low ratio indicates low profitability in the
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business. The profitability of different sections of the business such as sales
areas, classes of customers, product lines, methods of production etc., may
also be compared with the help of profit-volume ratio. The P/V ratio is also
used in making the following type of calculations:

a) Calculation of break-even point

b) Calculation of profit at a given level of sales
c) Calculation of volume of sales required to earn a given profit
d) Calculation of profit when margin of safety is given
e) Calculation of the volume of sales required to maintain the present
level of profit, if selling price is reduced.

Improvement of P/V Ratio

P/V ratio indicates the rate of profitability, any improvement in this ratio
without increase in fixed cost would result in higher profits. P/V ratio is the
function of sales and variable cost. Thus, it can be improved by widening
the gap between sales and variable cost. This can be achieved by:

A. Increasing the selling price

B. Reducing the variable cost
C. Changing the sales mix, i.e., selling more of those products which
have larger P/V ratio, thereby improving the overall P/V ratio.

METHODS OF BREAK-EVEN ANALYSIS

Break-Even Analysis may be performed by the following methods:

i. Mathematical calculation and ii. Graphic presentation

Mathematical or Algebraic Method (Calculation in Break-Even

Analysis)

Break-Even Point (BEP): The break-even point is the volume of output

or sales at which total cost is exactly equal to sales. It is a point of no profit
and no loss. This is the minimum point of production at which total cost is
recovered and after this point profit begins. This point, contribution is equal
to fixed cost. It can be calculated with the help of the following formulas:
Sales <BEP= Firms incur losses i.e., Contribution<Fixed Cost
Sales =BEP= No profit and No loss i.e., Contribution =Fixed Cost
Sales >BEP= Firms earn profits i.e., Contribution > Fixed Cost
Note: Break-Even Point (BEP) = Contribution – Fixed Cost

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Break-Even Point (in Units) = Fixed Cost_______
Contribution per Unit

Break-Even Point (Sales) = Fixed Cost__ X Selling Price Per Unit

Contribution per Unit

Break-Even Point (in Rs.) = Total Fixed Cost

P/V Ratio

Sales to earn a desired profit (in Units) = Fixed Cost + Desired Profit
Contribution per Unit

Sales to earn a desired profit (in Rs.) = Fixed Cost + Desired Profit
P/V Ratio

Illustration 2
From the following particulars calculate i. Contribution, ii. P/V Ratio,
iii. Break-Even Point in Units and Rupees and iv. What will be the selling
price per unit if the break-even point is brought down to 25,000 units?
Fixed expenses Rs.1,50,000/-, Variable cost per unit Rs.10/-, Selling
price per unit Rs.15/-.
(Ans. i.Rs.5/-, ii.33.33%, iii. 30,000 Units and Rs.4,50,000/-
and iv. Rs.16/-)
Illustration 3
The following figures relating sales and profits of a company for two
years period.
Year Sales (in Rs.) Profit (Rs.)

2021 1,00,000 15,000

2022 1,20,000 23,000

Calculate a. P/V Ratio, b. Fixed Cost and c. BEP (in Rs.)
(Ans. a. 40%, b. Rs.25,000/- and c. Rs.62,500/-)
Illustration 4
From the following particulars;
Selling price-Rs.150/- per unit, Variable cost-Rs.90/- per unit and Fixed
cost-Rs.6,00,000/- (total)
i. What is the Break-Even Point (BEP)? ii. What is the selling price per
unit if break-even point is 12,000 units?
(Ans i. 10,000 units and ii. Rs.140/-)

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Illustration 5
The following information is given:
Sales-Rs.2,00,000/-, Variable cost-Rs.1,20,000/-, Fixed cost-Rs.30,000/-
Calculate a) Break-Even Point (BEP), b) New Break-Even Point if selling
price is reduced by 10%, c) New Break-Even Point if variable cost is
increases by 10% and d) New Break-Even Point if fixed cost is increases by
10%. (Ans. a. Rs.75,000/-, b. Rs.90,000/-, c. Rs.88,235/- and d.
Rs.82,500/-)
Illustration 6
You are given the following data:
Fixed expenses-Rs.4,000/-, Break-Even Point-Rs.10,000/-
Calculate- a. P/V Ratio, ii) Profit when sales are Rs.20,000/- and iii) New
Break-Even Point if selling price is reduced by 20%
(Ans. i.40%, ii. Rs.4,000/- and iii. Rs.16,000/-)
MARGIN OF SAFETY (MOS)
Margin of safety may be defined as the difference between actual
sales and sales at break-even point. In other words, it is the amount by
which actual volume of sales exceeds the break-even point. Margin of safety
may be expressed in absolute monetary terms or a percentage of sales.
Margin of safety can be calculated from the following formula:
Margin of safety = Actual sales - BEP sales or
Margin of safety = Profit / Profit Volume ratio
Margin of safety as percentage = Margin of Safety X 100
Total sales
A large margin of safety indicates low fixed cost when margin of safety
is low any loss of sales may be matter of a serious concern. When margin
of safety is not satisfactory the following steps may be taken to improve it.
1. Increase the volume of sales.
2. Increase the selling price.
3. Reduce the fixed cost and variable cost.
4. Improve sales mix by increase the sales of product with larger profit
volume ratio.
Illustration 7
Calculate margin of safety in each of the following independent situations
i) Break Even Point 40%, Actual sales 40,0000/-
ii) Actual sales 40,000 units, Break Even Point 25000 units
iii) Break Even Point 75%
iv) Profit volume ratio 40%, Profit 35,000/-
v) Contribution per unit 20/-, Profit 15000/-
(Ans. i.Rs.24,000/-, ii. 15,000 units, iii. 25%, iv. Rs.87,500/- & v.
750 units)

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Illustration 8
Calculate contribution in each of the following independent situations:
1. Margin of safety -Rs.15,000/-, Fixed cost -Rs.25,000/-, Profit
volume ratio-30%
Also calculate profit in this case
2. BEP-Rs.40,000/-, Profit volume ratio-40%, Profit-Rs.10,000/-
3. Margin of safety-40%, Profit-Rs.30,000/-
4. P/V ratio-40%, Profit-Rs.50,000/-, BEP-Rs.1,00,000/-
5. Margin of safety-4000 units, Contribution-Rs.3/- per unit, Fixed
cost-Rs.30,000/-
Ans. a.Rs.29,500/-, ii. Rs. 26,000/-, iii. Rs.75,000/-, iv. Rs.90,000/-
ANGLE OF INCIDENCE
This angle is formed by the intersection of sales line and total cost
line at the break-even point. This angle shows the rate at which profits are
being earned once the break-even point has been reached. The wider the
angle, the greater is the rate of earning profits. Therefore, the aim of
management will be to have as large an angle as possible. The angle of
incidence is of particular importance in boom periods when sales are
expanding. Therefore, a large angle of incidence with a high margin of
safety indicates and extremely favourable position.
GRAPHICAL PRESENTATION OF BREAK-EVEN ANALYSIS
Break-even chart is a graphic presentation of break-even analysis.
This chart takes its name from the fact that the point at which the total cost
line and the sales line intersect is the break-even point. A break-even chart
not only shows the break-even point but also shows profit and loss at
various levels of activity.

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Thus, a break-even chart portrays the following information:
 Break-Even Point-the point at which neither profit nor loss is made.
 The profit/loss at different levels of output.
 The relationship between variable cost, fixed cost and total cost.
 The margin of safety
 The angle of incidence, indicating the rate at which profit is being
made.
 The amount of contribution at various levels of sales. (This can be
shown only on a specially designed ‘contribution break-even chart’.)
Illustration 9
The following data of Manoj Company Ltd., is supplied:
Fixed cost Rs.40,000/-
Variable cost Rs.60,000/-
Sales Rs.1,40,000/-
Sales/Production 1,40,000 units
Draw a break-even chart.
CASH BREAK-EVEN POINT
When break-even point is calculated only with those fixed costs which
are payable in cash, such a break-even point is known as cash break-even
point. This means that depreciation and other non-cash fixed costs are
excluded from the fixed costs in computing cash break-even point. Its
formula is-
Cash Break-Even Point=Cash Fixed Costs
Contribution per unit
Illustration 10
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 amounting to Rs.35,00,000 (including depreciation of Rs.15,00,000).
There is no beginning or ending inventories. You are required to calculate
breakeven sales level quantity and cash breakeven sales level quantity.
(Ans. 1,75,000 units & 1,00,000 units)
COMPOSITE BREAK-EVEN POINT
At the time of dealing general products a composite break-even
point can be calculated. The formula for calculating composite break-even
point are given below.
Composite Break-Even Point (in Units) =Composite Fixed Costs
Composite Contribution per unit
Composite Break-Even Point (in Rs.) =Total Fixed Costs
Composite P/V Ratio
Composite P/V Ratio =Total Contribution x 100
Total Sales

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Illustration 11
From the following details, calculate Composite Break-Even Point
Particulars Product
A B C D
Selling Price (Rs.) 40 80 60 40
Variable Cost (Rs.) 24 60 36 24
Sales Volume (Units) 2000 4000 2000 2000
Total Fixed Cost = 21,600/-
COST INDIFFERENCE POINT
Cost indifference point refers to that level of output where the total
cost or the profit of the two alternatives are equal. Such a level may be
calculated where two or more alternative methods of production or
machines are considered and the use of one machine involves higher fixed
cost and lower variable cost per unit while the other machine involves lower
fixed cost and higher variable cost per unit.
The calculation of point of cost indifference helps in a cost
minimisation exercise and identifies the alternative which is more profitable
for a given level of output or sales. A machine with a lower fixed cost and
a higher variable cost per unit is more profitable when actual sales are
below the point of cost indifference and vice-versa, a machine with a higher
fixed cost and a lower variable cost per unit is more profitable when actual
sales are more than the point of cost indifference. The formula for
calculation is as follows:
Cost indifference point (in units) = Difference in fixed cost
Difference in contribution per unit
Cost indifference point (in Rs.) = Difference in fixed cost
Difference in P/V ratio

Illustration 12
GMR Co. Ltd., has to choose between machine X1 and X2 and provides the
following data:
X1 X2
Output per annum (units) 10,000 10,000
Profit at the above level (Rs.) 30,000 24,000
Fixed cost per annum (Rs.) 30,000 16,000
Compute:
i. Break-Even Point of the two machines.
ii. Level of output where the two machines are equally profitable
iii. The machine suitable for different levels of output of the product.
(Ans. i. X1-5,000 units & X2-4,000 units, ii. 7,000 units & iii. X1 is
more profitable).

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 PRACTICAL QUESTIONS
Problem No. 1
From the following data calculate the break-even point
Direct material per unit- Rs.3/-
Direct labour per unit- Rs.2/-
Fixed overhead (total)-Rs.10,000/-
Variable overhead – 100% on direct labour
Selling price per unit- Rs.10/-
Trade discount-5%
Also determine the net profits, if sales are 10% above the break-even
point. (Ans. Profit: Rs.1,000/-)
Problem No. 2
The following data is given:
Selling price-Rs.20/- per unit; Variable manufacturing costs-Rs.11/- per
unit; Variable selling costs-Rs.3/- per unit; Fixed factory overheads-
Rs.5,40,000/- per year; Fixed selling costs-Rs.2,52,000/- per year.
You are required to compute:
i. Break-Even Point expressed in amount of sales in rupees;
ii. Number of units that must be sold to earn a profit of Rs.60,000/-
per year.
iii. How many units must be sold to earn a net income of 10% of sales?
(Ans. i.Rs.26,40,000/-, ii. 1,42,000 units & iii. 1,98,000 units)
Problem No.3
a). A company has fixed expenses of Rs.90,000/- with sales at
Rs.3,00,000/- and a profit of Rs.60,000/-. Calculate the Profit/Volume ratio.
If in the next period the company suffered a loss of Rs.30,000/-, Calculate
the sales volume. b). What is the margin of safety for a profit of Rs.60,000/-
in (a) above? (Ans. P/V ratio-50%, Sales-Rs.1,20,000/- & MOS-Rs.
1,20,000/-)
Problem No. 4
Sultan Plastic Company makes plastic buckets. An analysis of their
accounting reveals:
Variable cost per bucket-Rs.20/-; Fixed cost-Rs.50,000/- for the year
Capacity -2,000 buckets per year; Selling price per bucket-Rs.70/-
Required:
i. Find the break-even point
ii. Find the number of buckets to be sold to get a profit of Rs.30,000/-
iii. If the company can manufacture 600 buckets more per year with an
additional fixed cost of Rs.2,000/-, what should be the selling price
to maintain the profit per bucket as at ii) above.
(Ans. i. 1,000 units, ii. 1,000 units & iii. Rs.1,52,750/- & Selling
Price-Rs.58.75/- per unit)

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Problem No.5
You are given the following data:
Year Sales (Rs.) Profit (Rs.)
2022 1,20,000 8,000
2023 1,40,000 13,000
Find out:
i. P/V Ratio
ii. Break-Even Point (BEP)
iii. Profit when sales are Rs.1,80,000/-
iv. Sales required to earn a profit of Rs.12,000/-
v. Margin of Safety in 2023
(Ans. i. 25%, ii. Rs.88,000/-, iii. Rs.23,000/-, iv. Rs.1,36,000/-
& v. Rs.52,000/-)
Problem No. 6
Given below are the sales and profits of the two halves of the year:
Ist half IInd half
Sales (Rs.) 1,00,000 1,20,000
Profit (Rs.) 30,000 38,000
Fixed cost during the first half is equal to that during the second half.
Selling price and per unit variable cost remain unchanged. Calculate the
following:
a. P/V ratio for each half and for the full year.
b. Fixed cost for each half and for the full year.
c. BEP for each half and for the full year.
d. Half-yearly sales to earn half-yearly profit of Rs.40,000/-
e. Annual sales to earn annual profit of Rs.90,000/-
(Ans. i. 40%, ii. Rs.20,000/-, iii. Rs.50,000/-, iv. Rs.1,25,000/- & v.
2,75,000/-)
Problem No.7
The following is the budget of Cadila Co.
Particulars Fixed (Rs.) Variable (Rs.) Total (Rs.)
Budgeted Sales
2,00,000 units @Rs.25 each - - 50,00,000
Budgeted Costs:
Direct material 9,00,000
Direct labour 10,00,000
Factory overhead 7,00,000 3,00,000
Administration overhead 6,00,000 1,00,000
Distribution overhead 5,00,000 3,00,000
Total 18,00,000 26,00,000 44,00,000
Budgeted Profit 6,00,000

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Compute the break-even point in the following independent situations if:
i. 10% increase is effected in fixed costs.
ii. 10% increase is effected in variable costs.
iii. 10% increase is effected in sale price which results in reduction in
units sold by 5%.
iv. 10% increase in fixed costs and 5% decrease in variable costs is
effected.
(Ans. Variable cost-Rs.13/- per unit, i. Rs.41,25,000/-, ii.
Rs.42,05,600/-, iii. Rs.34,13,795/- & iv.39,13,050/-)
Problem No. 8
Following is the data taken from the records of a concern manufacturing a
special part ZEE.
Particulars Amount (Rs.)
Selling price per unit 20/-
Direct material cost per unit 5/-
Direct labour cost per unit 3/-
Variable overhead cost per unit 2/-
Budgeted level of output 80,000 units
Budgeted recovery rate of fixed 5/-
overheads cost per unit

You are required to:

a. Draw a break-even chart and show the break-even point
b. In the same chart show the impact on break-even point:
i. If selling price per unit is increased by 30% and
ii. If selling price per unit is decreased by 10%.
Problem No.9
The sales turnover and profit of M/s.A Ltd., during the two year were as
follows;
Year Sales (Rs.) Profit (Rs.)
2022 4,50,000 60,000

2023 5,10,000 75,000

You are required to calculate:
i. Profit-Volume (P/V) Ratio
ii. Sales at which company neither loss nor gain anything:
iii. Sales required to earn a profit of Rs.1,20,000/-
iv. The profit made when sales are Rs.7,50,000/-
(Ans. i. 25%, ii. Rs.2,10,000/-, iii. Rs.6,90,000/-, iv.
Rs.1,35,000/-)

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Problem No.10
An analysis of Sultan Manufacturing Company Ltd., to the following
information:
Cost element Variable cost Fixed cost
(% of sales) (Rs.)
Direct material 32.80 -
Direct labour 28.40 -
Factory overhead 12.60 1,89,900
Distribution overhead 4.10 58,400
General administration overhead 1.10 66,700
Budgeted sales for the next year Rs.18,50,000/-. You are required to
determine:
a. Break-Even sales value
b. Profit at the budgeted sales volume
c. Profit, if actual sales:
i. drop by 10%
ii. Increase by 5% from the budgeted sales.
(Ans. a. Rs.15,00,000/-, b. Rs.73,500/-, c. i. Rs.34,650/,
ii.Rs.92,925/-)

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