SR Ltd. produces and sells a product.

Due to severe competition, the company proposes to

reduce the selling price. Following is the details of its current year’s operations:
Sales (30,000 units × 100) Rs. 30,00,000
Variable costs Rs. 18,00,000
Fixed costs Rs. 7,00,000
Total cost Rs. 25,00,000
Profit Rs. 5,00,000
(i) Find out the increase in number of units to be sold if selling price is reduced by (a) 5% and
(b) 10% while maintaining the existing level of profit.
(ii) If company decides to sell 48,000 units in the next year to out-place the competitors, find
out theprice it should charge to continue to earn the existing level of profit.

Solve By Using Goal Seek

 A toy manufacturer earns an average net profit of 30 per unit in a selling price of 150 by producing and
selling 60,000 units at 60% of its capacity. The composition of his cost of sales is as follows:
Rs.
Direct material 40
Direct wages 10
Works overheads 50 (50% Fixed)
Sales overheads 20 (25% Variable)
During the current year, he intends to produce the same number but anticipates that :
(i) The fixed charges will go up by 10%.
(ii) Rates of labour will increase by 20%.
(iii) Rates of direct materials will increase by 5%.
(iv) Selling price cannot be increased.
Under these circumstances he obtains an order for a further 20% of his capacity. What minimum price will
you recommend for accepting the order so as to ensure the manufacturer earn an overall profit of Rs.
17,40,000

Solve By Using Goal Seek

 Modern Sports Ltd. has for the past several years produced boxing gloves which are sold at Rs.28 per pair.
Higher costs in recent years have made management to consider about the adequacy of this selling price.
The labour rate was increased from Rs.1.75 per hour to Rs. 2.25 per hour and the cost of leather has gone up
from Rs.1.10 to Rs.2.15 per square foot during the last five years. Fixed expenses have increased 25% from the
level of Rs.18,000 five years ago. Over the same period variable overhead has increased 30%, or Rs.3 per pair of
gloves. Each glove requires 1.5 sq. ft. of leather and one hour of direct labour.
Calculate the selling price that the company has to charge under the new cost structure to break-even at the
same number of units as five years ago.

Solve By Using Goal Seek

 JAL Ltd. can produce three different products from the same raw material using the same production facilities. The relevant details are as follo
Particulars X Y Z
Maximum market demand (units) 6,000 4,000 3,000
Selling price per unit (Rs. ) 250 200 400
Raw material as % of sales value 80% 60% 75%
Labour cost per unit ( Rs.) 24 40 32
Overhead Rate is Rs.10 per hour of which 60% is fixed. Raw material available is @ Rs.20 per kg and labour hours @ Rs.16 per hour.
Required: Find out the Optimum Product Mix and determine the Profit at the selected product Mix if a) Raw material is limted to 100000 kg, b)

Solution should be based on SOLVER

elevant details are as follows:

@ Rs.16 per hour.

is limted to 100000 kg, b) If Labour hours are limited to 18,400 hours.
 A company is at present working at 90 percent of its capacity and producing 13,500 units per annum. It operates a
flexible budgetary control system. The following figures are obtained from its budget:
90%(Rs.) 100% (Rs.)
Sales 15,00,000 16,00,000
Fixed expenses 3,00,500 3,00,6,00
Semi-fixed expenses 97,500 1,00,500
Variable expenses 1,45,000 1,49,500
Units made 13,500 15,000
Labour and material cost per unit are constant under present conditions. Profit margin is 10 percent.
(a) You are required to determine the differential cost of producing 1,500 units by increasing capacity to100 percent.
(b) What would you recommend for an export price for these 1,500 units taking into account the overseasprices are
much lower than indigenous prices?
Top-tech a manufacturing company is presently evaluating two possible machines for the manufacture of superior Pen-drives. The following information is available:

Particulars Machine A Machine B

Variable
Total fixed 50 10
cost per
costs perunit 50000 150000
(Rs.)
year

Required: (i CIP
ii) Suggest the most economical alternative machine to replace the existing one when the expected level of output is
a) 5000 b)1000
rmation is available:
SR Ltd. provides you the following information for its current year of operations:
SR Ltd. provides you the following information for its current year of operations:
Selling price (Rs.) 20
Variable cost per unit (Rs.) 12
Fixed costs per annum (Rs.) 160000
Sales / Production (units) 25000
Draw a BE Chart with orignal FC and Revised FC from the above information
Revised FC 200000
A company is manufacturing three products details of which, for the last year, are given below:

Product Price( Rs.) Variable Cost ( Rs. ) Sales mix

A 200 120 20
B 160 120 30
C 100 40 50
Total fixed cost per year Rs.11,60,000
You are required to work out
(I)The overall break-even point in units
(II)Product wise BEP in units & in Rs.
(iii) overall BEP in value
(iv) Overall PV ratio
(v) the predicted units of output are 10000,15000,20000,25000 and 30000
(vi) Graphically show overall BEP & PV ration
 A company has a capacity of producing 50,000 units of a product in a month. The sales department
reports that the following schedule of selling prices is possible:
Volume of sales (% capacity) Selling price per unit
50% 2.00
60% 1.90
70% 1.85
80% 1.80
90% 1.70
100% 1.60
Total fixed cost at 100% capacity is Rs.20,000 per month and variable cost per unit is Rs.1 per unit.
Prepare a statement showing total and differential costs.

Use Scenario Manager to solve this function

 Following information is
Selling Price 850
Units Sold 500
Variable Cost per Unit250
Fixed Cost 10000
Part I - You are required to compute an expected change in each of the following cases Solve the questio
so as to achieve a break even value.
Case 1 If there is a change in selling price per unit
Case 2 If there is a change in units sold
Case 3 If there is a change in cost per unit
Case 4 If there is a change in Fixed Cost

Part II - What will be profit, if the units sold are 500,600,700 and 800.
Part III - Also, what will be the profit in the following scenarios:-
Amount
Worst
Selling Price 700
Units Sold 300
Cost per uni 350
Better
Selling Price 860
Units Sold 600
Cost per uni 280
Best
Selling Price 1000
Units Sold 800
Cost per uni 200
Solve the question by using Goal-Seek, Data table and Scenario Manager
SR Ltd. provides you the following information for its current year of operations:
Selling pr 20
Variable c 12
Fixed cos 160000
Sales / Pr 25000
Draw a Break Even Chart, Contribution Chart and Profit Volume Chart from the above information
s current year of operations:

nd Profit Volume Chart from the above information

 ABC Ltd. manufacturing company producing three types of products i.e. P, Q and R. The current pattern of sales of three pro
ratio of 8:2:1 respectively. The relevant data are as follows -
Products P Q R
Selling Pri 200 260 420
Raw Mater 0.5 1.2 2.5
Direct Mat 0.25 - -
Skiiled La 4 6 8
Semi Skii 2 2 3
Variable 40 80 80
Prices of raw materials and direct materials respectively, are ₹ 100 and ₹ 40 per kg. Wage rate of skilled and semi-skilled lab
respectively, are ₹6 and ₹5. Each operator work 8 hours a day for 25 days in a month. The position of inventory are as follow
Particulars
Raw Materials
Direct MaterialsP Q R
Opening 600 400 400 100 50
Closing 650 260 200 300 50
The fixed overhead amounts to ₹ 2,00,000 per month. The company desires a profit of ₹ 1,20,000 per month. Prepar
1. Sales budget in quantity and value
2. Production budget showing quantity
3. Purchase budget showing the quanti
4. Direct labour budget showing the
of sales of three products is in the

and semi-skilled labour,

entory are as follows -
The following data relates to ABC Ltd.
The financial manager has made the following sales forecast for the first 5 months of the coming year, commencing
Month Sales (₹)
April 40,000
May 45,000
June 55,000
July 60,000
August 50,000
Other data
1. Debtor's and creditor's balance at the beginning of the year are ₹ 30,000 and ₹ 14,000 respectively. The
balance of other relevant assets and liabilities are
(a) Cash Balance ₹ 7,500
(b) Stock ₹ 51,000
© Accrued sales commission ₹ 3,500
2. 40% sales are on cash basis. Credit sales are collected in the month following the sale.
3. Cost of sales is 60% of sales.
4. The only other variable cost is 5% commission to sales agents. The sales commission is paid in a month after it i
5. Inventory is kept equal to sales requirements for the next 2 months budgted sales.
6. Trade creditors are paid in the following month after purchases.
7. Fixed costs are ₹ 5,000 per month including ₹ 2,000 depreciation.

You are required to prepare a cash budget for the month of April, May and June 2023 respectively. Also show
Sales, Creditors, Total Receipts and Total Payment information graphically.
g year, commencing from 1 A

ctively. The

n a month after it i

ly. Also show