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CS Exe. u.ive ({;Si (?,Mgt Accounting Marginal Costing Dec 2013 attempt
Class Assessment Test on Marginal Costing
Q, Given below are the sales and profits of the two halves of the year:
1st half 2
nd
half
Sales Rs.l,OO,OOO Rs.l,20,000
Profit Rs.2O-,OOO Rs.25,000
Fixed cost during the first half is equal to that during the second half. Selling]
price and per unit Variable Cost remain unchanged. Calculate the following:
I.. P ratio and annual Fixed cost.
2.. REP fix each half and for the year.
3. Half-yearly sale to earn half-yearly profit of Rs.60,OOO.
,1 Annual sale to earn annual profit ofRs.l 00,000.
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CS Executive, Cost & Mgt Accounting Marginal Costing Dec 2013 attempt
Q.2. A company manufactures three products. The budgeted quantity, selling prices
and unit costs are as under: Rs.
ABC
Raw materials @Rs.20 per kg. 80 40 20
Direct wages @Rs.5 per hour 5 15 10
Variable overheads 10 30 20
Fixed overheads 9 22 18
Budgeted production (in units) 6,400 3,200 2,400
Selling price per unit (in Rs.) 140 120 90
Set optimal product-mix and determine the profit if the supply of labour is
restricted to 12,000 hrs.
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21Page CA. Ankur Kulshrestha, CFA, M.Com, B.Com(SRCC)
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CS Executive, Cost & Mgt Accounting Marginal Costing Dec 2013 attempt
Q.3, A product can be purchased from the market at Rs. 10 per unit. Taxes on
purchase will amount to Rs. 3 per unit. If we decide to manufacture it in
house, it will take a marginal cost of Rs. 8 per unit. One of labourer will be
required to spent two hours on it. He also works on another product which has
Rs, 24 as selling price and variable cost of Rs. 16. Labour is required to work
for 4 hours on one unit of this product. Suggest to make or buy if
a Worker has excess capacity
b Worker does not have spare time.
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CS Executive, Cost & Mgt Accounting Marginal Costing Dec 2013 attempt
Q,,'( f\ retail dealer in garments is currently selling 24,000 shirts annually. He
supplies the following details for the year:
Rs.
Selling price per shirt 42
Variable cost per shirt 30
Fixed cost 300,OO(}
As '. ccountant of the firm you are required to answer the following
parG independentl :
1, Calculate the break-even point and margin of safety in sales revenue.
L Assume that 18,000 shirts were sold in a year. Find out the net profit of the
finn,
3, If it is decided to introduce selling commission of Rs.5 per shirt, how many.
shins would require to be sold in a year to earn a net income ofRs.15,000. .,
4, Assuming that for the year 2007 an additional staff salary of Rs.35,OOO and'
increase in selling price by 20% is anticipated, what should be the break-even
point in number of shirts and sales revenue?
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;'S' {'x__ ecutive, Cost & Mgt Accounting Marginal Costing Dec 2013 attempt
A company manufactures a single product having a marginal cost ofRe.0.75 a
unit Fixed costs are Rs.12,000. The market is such that up to 40,000 units can
be sold at Rs.l.50 a unit, but any additional sales must be made at Re.l.00 a
unit How many units must be made and sold if:
a) There is a planned profit of Rs.25,000. + :::-- 3..=t-. GtSlJ
b) There is a planned profit ofRs.16,OOO.-\- \ z.B,
c) There is a planned profit ofRs.44,000. k \ S", ns-o
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Q. 6. A Company sells its product at Rs.15 per unit. In a period if it produces and'
sells 8.000 units, it incurs a loss ofRs.3 per unit. If the volume is raised to 20,000, it
earns a profit of Rs.5 per unit. Calculate the break-even point.
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'..xecuttve, .ostcc t. gt ccounting Marginal Costing Dec 2013 attempt
Q. 7 Two manufacturing companies which have the following operating details
decided to merge:
II Assuming that the proposal is implemented, calculate
(i) Break-even sales of the merged plant and the capacity utilization on at that
stage.
(ii) Profitability of the merged plant at 80% capacity utilization.
of the merged plant to earn a profit ofRs. 75 lakh.
Company- Company-
I II
Capacity
I: (%)
100 50
utilisation
Sales : (Rs. In lakhs). 600 240
Variable costs : (Rs. In lakhs) 420' 180
Fixed .. L-:.->..{R_s_._I_n_Ia_kh_s)<-- 80 4_0
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