Page 85 - DCOM206_COST_ACCOUNTING_II

Cost Accounting – II

Notes Solution:
Sales to earn a profit of ` 1,00,000:
Fixedcost+Desiredprofit
=
Contribution

1,50,000 1,00,000
=  4,00,000
2,00,000
2,50,000
=  4,00,000
2,00,000
= ` 5,00,000
7. Evaluation of Performance: Marginal costing helps the management in measuring the
performance efficiencies of a department or a product line or sales division. The department
or the product or sales division which gives the highest P/V ratio will be the most profitable
or that is having the highest performance efficiency.

Problem 15:
Given fixed cost ` 8,000, profit earned ` 2,000, and Break-even sales ` 30,000, find the actual
sales.

Solution:
Let the actual sales be X.

Fixedcost
Break-even Sales = ×Sales
Contribution
8,000X
30,000 =
8,000  2,000

8,000X
30,000 =
10,000
30,000 = 0.8X

30,000
X = = ` 37,500
0.8
Problem 16:
From the following data, find break-even point.
Selling price ` 10 per unit

Direct material cost ` 3 per unit
Labour cost per unit ` 2 per unit
Fixed cost ` 10,000
Trade discount 5%

Variable overheads 100% on labour cost.
If sales are (i) 10% and (ii) 15% above the break-even volume, determine the net profits.

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