cost accounting

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rohit (Querist)
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23 August 2009 A company produces a single product sells it at Rs 50 per unit. The variable cost per unit is Rs 35 and the fixed costs are Rs 12 lacs per annum. Please calculate:
(i) P/V ratio and break even sales
(ii) New breakeven if variable costs increase by Rs 3 per unit, without increase
in selling price.
(iii) Increase in sales required if profits are to be increased by Rs 240000
(iv) Quantum of advertising expenditure permissible to increase sales by Rs
120000 without affecting the existing profit quantum.
All the events are independent of each other.

Guest

Guest (Expert)

24 August 2009 Hi Rohit

Please note the following answers:

(a) PV ratio is 30% and Break even sales is 8000 units or Rs 40,00,000 sales

(b) Revised breakeven sales is 100,000 units or Rs 50,00,000 sales

(c) To achieve profit of Rs 240000, sales required is 96000 units. Please note that existing sales is required to calculate the increase. Let it be "X" then increase is 96000-X.

(d)Please let me know the existing sales or profit to calculate this.

Hope this assists you.

You can write to me at ca.hims@gmail.com for any further help.

Thanks & Best Regards
ca.hims@gmail.com

I'm a freelance consultant and you can reach at my email ID ca.hims@gmail.com anytime for your advisory needs including CA related, career and financial planning. For more details visit my profile.

(d)

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