Page 278 - DMGT403_ACCOUNTING_FOR_MANAGERS

Unit 12: Marginal Costing and Profit Planning

6. A company makes and sells a single product. At the beginning of period 1, there is no Notes
opening stock of the product, for which the variable production cost is 4 and the sale
price is 6 per unit. Fixed costs are 2,000 per period of which 1,500 are fixed production
costs.
The following details are available:

Period 1 Period 2
Sales 1,200 units 1,800 units
Production 1,500 units 1,500 units

What would be the profit in each period using
(a) Absorption costing (assume normal output is 1,500 units per period); and
(b) Marginal costing?
7. Sales are 1,50,000, producing a profit of 4,000 in period I. Sales are 1,90,000, producing
a profit of 12,000 in period II. Determine the BEP.
8. There are two businesses D and Y, selling identical products in the market. The following
are the budget figures related to a particular year.
D Y
Sales 5 lakh 5 lakh
VC 4 lakh 3.5 lakh
FC 0.5 lakh 1 lakh
Profit 0.5 lakh 0.5 lakh

You are requested to calculate BEP for the two businesses.
9. KSBS Co. produces a simple article and sells it at 100 each at the mat. Cost of production
is 60 p/unit and fixed cost 40,000 P/annum. Calculate:
(a) P.V(ratio)
(b) BEP (sales)

(c) Sales to earn a profit of 50,000
(d) Profit at a sale of 3,00,000
(e) New BEP when S.P. is reduced by 10%
10. From the following information, calculate PV (r) and BEP

(a) SP (P.U.)- 10
(b) Trade discount-5%
(c) Direct Material cost (P.U.) – 2
(d) Fixed overhead – 100% OR direct labour cost

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