Numericals on Cvp Analysis
V-C-P Analysis
1 BEP (units) BEP (amount) BEP (amount) P/V ratio TOTAL FIXED COSTS SP per unit - VC per unit
2
BEP (units) x SP per unit TOTAL FIXED COST P/V ratio CONTRIBUTION per unit SP per unit Variable cost per unit SP per unit ASR - BESR
3
4
5
V/V ratio MARGIN of SAFETY MS (Amount) MARGIN of SAFETY MS (Units) MS ratio or % PROFIT PROFIT Sales Revenue for desired Op Profit
6
Units actually sold - BEP (units)
7
8 9 10
MARGIN OF SAFETY ASR (Actual sales revenue) MS (amount) x P/V ratio MS (units) x C M per unit FC + Desired Operating Profit
11
P/V ratio
P/V + V/V always equals 1
Q 1.
Data pertaining to M/s XYZ Ltd for the current year Particulars Total Costs Total Sales 1st Half 40,000 45,000 2nd Half 43,000 50,000
Assume equal fixed costs in the two half years Assume constant selling price and variable costs Calculate for the entire year :a. Total Profit b. P/V ratio c. Fixed costs d. BEP (amount) e. Safety margin % f. Sales volume required if desired profit is 14000 g. Profit if sales volume were 10% higher h. Sales volume required to maintain same profit if SP per unit reduced from Rs 10 to Rs 9 Ans Let additional units in 2nd half be X 43000 - 40000 = 3000 = V x X 50000 - 45000 = 5000 = S x X 3000/5000 = 60% = V/S = V/V ratio So P/V ratio = contribution/sales = 40% Of 95000, VC = 60% = 57000, Profit = 95000 - 83000 = 12000 So FC = 95000 -12000 - 57000 = 26000 BEP (amount) = FC / Contribution = 26000 / 40% = 65000 Safety margin = 95000 - 65000 = 30000 So Safety margin % = 30000/95000 = 31.58% Sales volume required if desired profit is 14000 (desired profit + FC) / PV ratio
(1400 + 26000) / 40% = 100,000 If sales volume were 10% higher total sales would be 95000 x 1.1 = 104,500 and Profit then will be MS(amount) x P/V ratio (104,500 - 65000) x 40% = 39500 x 40% = 15800 From P/V ratio of 40 % we know that CM is 40% of sales So at SP of Rs 10/- CM(unit) was Rs 4 & FC Rs 6 At SP of Rs 9/- CM(unit) will reduce to Rs 3 So sales volume reqd to
1 BEP (units) BEP (amount) BEP (amount) P/V ratio TOTAL FIXED COSTS SP per unit - VC per unit
2
BEP (units) x SP per unit TOTAL FIXED COST P/V ratio CONTRIBUTION per unit SP per unit Variable cost per unit SP per unit ASR - BESR
3
4
5
V/V ratio MARGIN of SAFETY MS (Amount) MARGIN of SAFETY MS (Units) MS ratio or % PROFIT PROFIT Sales Revenue for desired Op Profit
6
Units actually sold - BEP (units)
7
8 9 10
MARGIN OF SAFETY ASR (Actual sales revenue) MS (amount) x P/V ratio MS (units) x C M per unit FC + Desired Operating Profit
11
P/V ratio
P/V + V/V always equals 1
Q 1.
Data pertaining to M/s XYZ Ltd for the current year Particulars Total Costs Total Sales 1st Half 40,000 45,000 2nd Half 43,000 50,000
Assume equal fixed costs in the two half years Assume constant selling price and variable costs Calculate for the entire year :a. Total Profit b. P/V ratio c. Fixed costs d. BEP (amount) e. Safety margin % f. Sales volume required if desired profit is 14000 g. Profit if sales volume were 10% higher h. Sales volume required to maintain same profit if SP per unit reduced from Rs 10 to Rs 9 Ans Let additional units in 2nd half be X 43000 - 40000 = 3000 = V x X 50000 - 45000 = 5000 = S x X 3000/5000 = 60% = V/S = V/V ratio So P/V ratio = contribution/sales = 40% Of 95000, VC = 60% = 57000, Profit = 95000 - 83000 = 12000 So FC = 95000 -12000 - 57000 = 26000 BEP (amount) = FC / Contribution = 26000 / 40% = 65000 Safety margin = 95000 - 65000 = 30000 So Safety margin % = 30000/95000 = 31.58% Sales volume required if desired profit is 14000 (desired profit + FC) / PV ratio
(1400 + 26000) / 40% = 100,000 If sales volume were 10% higher total sales would be 95000 x 1.1 = 104,500 and Profit then will be MS(amount) x P/V ratio (104,500 - 65000) x 40% = 39500 x 40% = 15800 From P/V ratio of 40 % we know that CM is 40% of sales So at SP of Rs 10/- CM(unit) was Rs 4 & FC Rs 6 At SP of Rs 9/- CM(unit) will reduce to Rs 3 So sales volume reqd to