Question

1) From the following particulars, calculate:

(a) P / V Ratio

(b) Profit when sales are OMR. 40,000, and

(c) New break-even point if selling price is reduced by 10%

Fixed cost = OMR. 8,000

Break-even point = OMR. 20,000

Variable cost = OMR. 60 per unit

2)Fixed cost  OMR. 8,000

Profit earned  OMR. 2,000

Break-even sales   OMR. 40,000

What is the actual sales?

3)

You are given the following data:

Fixed expenses OMR. 4,000

Break-even point OMR. 10,000

Calculate--

(i) PV ratio

(ii) Profit when sales are OMR. 20,000

(iii) New break-even point if selling price is reduced by 20%

4)

Given the following information:

Units of output   500,000

Fixed cost  OMR. 750,000

Variable cost per unit  OMR. 2

Selling price per unit  OMR. 5

  You are required to determine:

(i) The break-even point

(ii) The sales needed for a profit of OMR. 6,00,000 and

(iii) The profit if 400,000 units are sold at OMR. 6 per unit

Answer 1

Please upvote for the earnest efforts put. Do comment in case of any query regarding this solution  

1. .
   1. PV RATIO = CONTRIBUTION/SALES ie, 8,000/20,000*100 = 40%
   2. Profit = Contribution - Fixed Costs ie, (40,000*40%)-8,000 = OMR 8,000
   3. Break Even Units = Fixed Cost /Contribution Per Unit ie 8,000/(1*90% - 0.60) = 26,667 units or 26,667*0.9 = OMR 24,000.
2. PV RATIO = CONTRIBUTION/SALES ie 8,000/40,000 =0.2 or 20%. Hence actual sales for Profit of 2,000 =>(8,000+2,000)/20% = OMR 50,000
3. .
   1. PV RATIO = CONTRIBUTION/SALES IE 4,000/10,000 =0.4 or 40%
   2. Profit = (20,000*40%) - 4,000 = OMR 4,000
   3. PV RATIO Will be 25% so new Break Even Sales = 4000/0.25 = OMR 16,000.
4. .
   1. Break Even Point = 750,000/(5-2) = 250,000 units or 250,000* OMR 5 = OMR 1250,000
   2. Units to be sold for 600,000 Profit => (750,000+600,000)/(5-2) = 450,000 units or 450,000*5 = OMR 2250,000
   3. Profit = Contribution - Fixed Cost ie, [(6-3)*400,000]-750,000 = OMR 450,000