Ganesh Ltd. budgets for a production of 250000 units. The variable cost per unit is Rs.15 and fixed cost per unit is Rs.3 per unit. The company fixes the selling price to fetch a profit of 20% on cost. Compute the profit/volume ratio.
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Salma Banu, department of Commerce and Management, paper: cost accounting II, 4
th sem BCom
E section
Problems on marginal costing
1The following data is given:
Fixed cost =₹12000
Selling price =₹12 per unit
Variable cost= ₹ 9 per unit
i) What will be the profit when sales are a)₹ 60000 b) ₹ 100000?
ii) What will be the amount of sales at desired to earn a profit of c) 6000; d) 15000?
Solution:
=
=
3
12 = 25%
a) When sales= ₹60000
= ×
=₹60000×25%=₹15000
= −
= 15000 − 12000 = 3000
b) ℎ = 100000
= 100000 × 25% = 25000
= 25000 − 12000 = 13000
c) When Sales for desired Profit =
Fixed Cost+Desired Profit
When Sales for desired Profit =
12000 + 6000
25% = 72000
d) When Sales for desired Profit =
12000+15000
25%
= 108000
Calculation of missing figures
Example
Given:
− = 30000
= 1500
= 6000