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Eak-Even Analysis Numericals

The document presents several numerical problems related to break-even analysis, requiring calculations of break-even points, net sales values, fixed costs, and profits based on given data. It includes specific scenarios for different companies and products, detailing costs, selling prices, and sales percentages. The problems aim to enhance understanding of break-even concepts and their applications in business decision-making.

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60 views7 pages

Eak-Even Analysis Numericals

The document presents several numerical problems related to break-even analysis, requiring calculations of break-even points, net sales values, fixed costs, and profits based on given data. It includes specific scenarios for different companies and products, detailing costs, selling prices, and sales percentages. The problems aim to enhance understanding of break-even concepts and their applications in business decision-making.

Uploaded by

Earth Lover
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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BREAK-EVEN ANALYSIS

NUMERICAL PROBLEMS

SLIDE NO. 1
 PROBLEM 4

From the following data you are required to calculate break-even point and net sales value at this point.

Direct material cost per unit: Rs. 8/-


Direct labour cost per unit: Rs. 5/-
Fixed overheads: Rs. 24,000/-
Variable overheads: @ 60% on direct labour
Selling price per unit: Rs. 25/-
Trade discount: 4%

If sales are 15% and 20% above the break-even volume, determine the net profit.

SLIDE NO. 2
 PROBLEM 5

Agarwal & Company sold in two successive years 7000 and 9000 units and incurred a loss of Rs. 10,000/- and earned
Rs. 10,000/- as profit respectively. The selling price per unit is Rs. 100/-. Compute:
(a) The amount of fixed cost.
(b) The number of units to break even.
(c) The number of units to earn a profit of Rs. 50,000/-.

Solution: P = S - (V + FC) =>> P = Q.s – (Q.v + FC)

Year 1: - 10,000 = 7000x100 – (7000.v + FC) ………………………. (a) FC = ?


Year 2: + 10,000 = 9000x100 – (9000.v + FC) ………………………. (b) v = ?

BEQ = FC/(s-v)

50,000 = 100.Q – (FC + v.Q)

SLIDE NO. 3
 PROBLEM 6

A manufacturer has three products with the following data:


Product Unit Price (Rs.) Variable cost/ Unit (Rs.) % of Sales
A 60 40 30%
B 100 60 20%
C 200 120 50%
Total fixed costs = 75,000/- Total sales = Rs. 2,50,000/-

The manufacturer also has the following alternative with the following data:
Product Unit Price (Rs.) Variable cost/ Unit (Rs.) % of Sales
A 60 40 44%
D 216 180 16%
C 200 120 40%
Total fixed costs = 75,000/- Total sales = Rs. 2,70,000/-

Which of the two alternatives would you recommend and why?

SLIDE NO. 4
 PROBLEM 3 (hint to solve)
Total Variable Cost

P = (QA.sA + QB.sB + QC.sC) – {FC + (QA.vA + QB.vB + QC.vC)}

P2 = (QA.sA + QD.sD + QC.sC) – {FC2 + (QA.vA + QD.vD + QC.vC)}

SLIDE NO. 4
 PROBLEM 7

The fixed cost for a manufacturing process is Rs. 5000/- a year. Revenue per piece is Rs. 4/-. When 3000 or fewer
items are being made, the variable cost can be held to Rs. 2/- each but when volume rises above this level, there is
overtime and the cost rises to Rs. 2.40/- each.

Find (a) The break even point


(b) The profit at 4,000 pieces.

SLIDE NO. 5

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