Page 73 - DCOM206_COST_ACCOUNTING_II

Cost Accounting – II

Notes Fixed cost ` 1,20,000
Estimated sales ` 3,00,000
Solution:
Contribution = Selling price per unit – Variable cost per unit

Contribution = 30 – 20
= ` 10
Contributionperunit
P/V Ratio =  100
Sellingpriceperunit
10
=  100 = 33.33%
30
Fixedcost SPperunit

Break-even Point (in `) =
Contributionperunit

1,20,000 30 36,00,000
= 
10 10
= ` 3,60,000

Fixedcost
Break-even Point (in units) =
Contributionperunit
1,20,000
=
10
= 12,000 Units

Problem 6:
A Company Manufactures and sells a product at fixed selling price. The budgeted figures for
2008-09 are:

Production output and sales 2,00,000 units
Variable cost ` 56 per unit
Fixed cost ` 48 lakhs
Profit margin 33.33% of selling price

You are required to determine sales at break-even both in terms of quantity and volume for the
budget year 2008-09 at the above selling price.
Solution:

Calculation of selling price per unit:
Variable cost per unit ` 56
Fixed cost per unit (48,00,000 ÷ 2,00,000 units) ` 24
Total Cost ` 80

Profit 33.33% of selling price or 50% of cost 40
Selling Price ` 120

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