MC Sol.

Q.1. Contb.= SP-VC

= 10-6= 4
a) BEP = FC/Contb. Per unit
= 80,000/4
= 20,000 units
b) sales requied to earn a profit of Rs 1,50,000
= FC+ desired profit/contb. Per unit
= 80,000+1,50,000/4
= 57,500 units
c) profit if 80,000 units are sold @ Rs 9 per unit
Profit=sales (P-VC) - FC
= 80,000 x (9 6) 80,000
= 1, 60,000
New contribution = New SP VC per unit
=96
=3

Q. 2 a) Contb. = SP VC
= 50 30
= 20
b) PV ratio = Contb./SP x 100
= 20/50 x 100
= 40%
c) BEP (Rs.) = FC/PV ratio
= 60,000/40%
= Rs 1,50,000
BEP (units) = FC/contb. Per unit
= 60,000/20
= 3,000 units
If we multiply number of units at BEP by SP per unit, we get Rs. 1,50,000
d) sales required to earn profit of Rs 40,000 = FC+desired profit/pv ratio
= 60,000+40,000/40%
= Rs 2,50,000
e) New BEP when SP is reduced to Rs 45 per unit = FC/New contribution
= 60,000/15
= 4,000 units
New contrib..= New SP VC per unit

Q. 3 a) BEP = FC/ contb. Per unit

To cover FC 3,00,000 on 5,000 units contribution per unit shall be:
Contribution per unit is = 3,00,000/5,000
= Rs 60
BEP = 3,00,000/60
= 5,000 units
At present the contribution is s 50 (200 150). Therefore, in order to bring the
BEP at 5,000 units, contribution should be brought to Rs 60. This means that
the SP should be increased by Rs 10. Thus the new selling price should be
200 + 10, i.e. Rs 210

Q. 4. a) PV ratio = C/S x 100

=15 12/15 x 100
=20%
b) Margin of safety = profit/pv ratio
= 50,000/20%
= Rs 2,50,000

Q.5 a) PV ratio = change in profit/change in sales x 100

= 4,000/20,000 x 100
= 20%
b) BEP = FC/pv ratio
= FC = sales x pv ratio profit
= FC in I year = 1,20,000 x 20% - 9,000
= Rs 15,000
= FC in II year = 1,40,000 x 20% - 13,000
= Rs 15,000
Therefore BEP = 15,000/20 x 100
= Rs 75,000
c) profit when sales are Rs 1,00,000 = sales x pv ratio FC
= 1,00,000 x 20% - 15,000
= Rs 5,000
d) sales required to earn a profit of Rs 20,000 = FC+desired profit/pv ratio
= 15,000+20,000/20%
= Rs 1,75,000
e) Margin of safety in II year = Actual sales BE sales
= 1,40,000-75,000
= Rs 65,000
Margin of safety = profit/pv ratio
= 13,000/20%
= Rs 65,000

Q. 6 a)PV ratio = S-V/S x 100

= 1,80,000-1,35,000/1,80,000 x 100
= 25%
b) BEP = FC/pv ratio
= 20,000/25 x 100
= Rs 80,000
c) Contribution = pv ratio x sales
= 25% x 2,00,000
= Rs 50,000
Net profit = Contb. FC
= 50,000 20,000
= 30,000
d) sales required to earn a profit of Rs 45,000 = FC+desired profit/pv ratio
= 20,000+45,000/25 x 100
= Rs 2,60,000