Shadow

Management Accounting (In English ) Chapter-3

Table of Contents

Management Accounting (In English )

Management Accounting (In English ) Chapter-3
Management Accounting (In English )
Chapter-3

Chapter-3

Cost-Volume-Profit Relationships ( e¨q-cwigvY-gybvdvm¤úK© )

GB Aa¨v‡qi AsK ¸wj Ki‡Z †M‡j wb‡¤œi GB m~G ¸wj Aek¦B g‡b ivL‡Z n‡e

Particular  (Tk) Seles = (weµq)

Variable cost =(cwieZ©bkxj e¨q )

Contribution = (`Ivsk / Aewkó )

EBIT = Earning Before Interest and Taxes = ( my` I Ki cÖ`v‡bi c~e©eZx© Avg )

EBT = Earning After Tax = ( Ki cÖ`v‡bi cieZx© Avq

EACS = Earning Available for Common Stock = ( cviw¤¢K g~jb )

Sales

(-) Variable cost (V.C)

*****

*****

Contribution Margin ( C.M / P.V)

(-) Fixed cost (F.C)

*****

*****

EBIT / Profit

(-) Interest (I)

*****

*****

EBT

(-) Tax rate (EBT% )

*****

*****

EAT

(-) Preference stock Dividend (P.D)

*****

*****

EMACS *****

Management Accounting (In English )

Management Accounting (In English ) Chapter-3
Management Accounting (In English )
Chapter-3

Chapter-3

01 Contribution Margin per unit = Selling Price per unit – Variable cost (V.C)  per unit
02 Contribution Margin = Sales – Variable cost (V.C)

Or,

Contribution Margin = EBIT / Profit + Fixed cost (F.C)

03 Sales = Contribution Margin + Variable cost (V.C)

Or,

Sales = EBIT / Profit + Fixed cost (F.C) + Variable cost (V.C)

04 Variable cost (V.C) = Sales – Contribution Margin

Or,

Variable cost (V.C) = Sales – Fixed cost – EBIT / Profit

05 Fixed cost (F.C) = Contribution Margin – EBIT / Profit

Or,

Fixed cost (F.C) =  Sales – Variable cost – EBIT / Profit

06 EBIT / Profit =  Sales – Variable cost – Fixed cost

Or,

EBIT / Profit =  Contribution Margin – Fixed cost

 

Management Accounting (In English )
Chapter-3

 

 

01  C.M ratio / PV ratio =  100

Or,

C.M ratio PV ratio =  100

Or,

C.M ratio / PV ratio =  100

Or,

C.M ratio / PV ratio =  100

Or,

C.M ratio / PV ratio = 1 –Variable cost ratio

Or,

C.M ratio / PV ratio =  100

Or,

C.M ratio / PV ratio =  100

Or,

C.M ratio / PV ratio =  100

Or,

C.M ratio / PV ratio = Sales ratio – Variable cost ratio

Or,

C.M per unit = 100% – V.C ratio

 

 

 

 

 

Here,

Break-even sales =   Sales

Here,

Variable cost ratio =

Here,

 

 

 

Management Accounting (In English )
Chapter-3

04. V.C ratio =  100  / V.C =  Sales  V.C ratio  / Sales =  /

05. Fixed cost ratio =  100 / F.C = Sales  F.C ratio / Sales =

  1. EBIT / Profit ratio = 100 / EBIT / Profit = Sales EBIT / Profit ratio

/ Sales =

  1. Margin safety (M.S) ratio = 100 / M.S = Sales M.S ratio

/ Sales =

  1. Break Even Point (BEP) ratio =100 / BEP = Sales  BEP ratio / Sales =

MANAGEMENT ACCOUNTING

Chapter-5

Cost-Volume-Profit Relationships ( e¨q-cwigvY-gybvdvm¤úK© )

GB Aa¨v‡qi AsK ¸wj Ki‡Z †M‡j wb‡¤œi GB m~G ¸wj Aek¦B g‡b ivL‡Z n‡e

Particular  (Tk) Seles = (weµq)

Variable cost =(cwieZ©bkxj e¨q )

Contribution = (`Ivsk / Aewkó )

EBIT = Earning Before Interest and Taxes = ( my` I Ki cÖ`v‡bi c~e©eZx© Avg )

EBT = Earning After Tax = ( Ki cÖ`v‡bi cieZx© Avq

EACS = Earning Available for Common Stock = ( cviw¤¢K g~jb )

Sales

(-) Variable cost (V.C)

*****

*****

Contribution Margin ( C.M / P.V)

(-) Fixed cost (F.C)

*****

*****

EBIT / Profit

(-) Interest (I)

*****

*****

EBT

(-) Tax rate (EBT% )

*****

*****

EAT

(-) Preference stock Dividend (P.D)

*****

*****

EMACS *****

Management Accounting (In English )
Chapter-3

 

01 Contribution Margin per unit = Selling Price per unit – Variable cost (V.C)  per unit
02 Contribution Margin = Sales – Variable cost (V.C)

Or,

Contribution Margin = EBIT / Profit + Fixed cost (F.C)

03 Sales = Contribution Margin + Variable cost (V.C)

Or,

Sales = EBIT / Profit + Fixed cost (F.C) + Variable cost (V.C)

04 Variable cost (V.C) = Sales – Contribution Margin

Or,

Variable cost (V.C) = Sales – Fixed cost – EBIT / Profit

05 Fixed cost (F.C) = Contribution Margin – EBIT / Profit

Or,

Fixed cost (F.C) =  Sales – Variable cost – EBIT / Profit

Or,

Fixed cost (F.C) = Sales  P/V ratio – Profit

06 EBIT / Profit =  Sales – Variable cost – Fixed cost

Or,

EBIT / Profit =  Contribution Margin – Fixed cost

Or,

EBIT/Profit = Sales  P/V ratio – Fixed cost

 

 

Management Accounting (In English )
Chapter-3

 

 

01  Contribution Margin / Profit Volume (C.M /P.V )

C.M ratio / PV ratio =  100

Or,

C.M ratio PV ratio =  100

Or,

C.M ratio / PV ratio =  100

Or,

C.M ratio / PV ratio =  100

Or,

C.M ratio / PV ratio = 1 –Variable cost ratio

Or,

C.M ratio / PV ratio =  100

Or,

C.M ratio / PV ratio =  100

Or,

C.M ratio / PV ratio =  100

Or,

C.M ratio / PV ratio = Sales ratio – Variable cost ratio

 

 

 

 

Here,

Break-even sales =   Sales

Here,

Variable cost ratio =

Here,

 

 

New EBIT – Old EBIT

 

= New Sales – Old Sales

 

 

02

 

Net Profit ratio/ EBIT ratio  =  100

 

 

03

Management Accounting (In English )
Chapter-3

Break Even Point (BEP) :

01. BEP (unit) =

Hear,

F.C = Sales  C.M ratio – Profit

 

02. BEP ( Tk) = BEP (unit)  Selling price per unit

03. BEP sales ( Tk) =  [ hw` unit bv _v‡K ]

04. BEP (sales) =   Sales

05. Target sales =

Or,

Target sales = [hw` unit bv _v‡K ]

Hear,

P/V ratio/C.M ratio =

Margin of safety (M/S) :

M/S ratio =  100

M/S (Tk) =  Sales – BEP sells/Tk

Hear,

BEP sales/Tk =   Sales

BEP sales/Tk =  [hw` unit bv _v‡K ]

 

 

 

Part -B

Ex- 01. The operational data of the Tasfin Company for the year 2003 ate as follows :

Sales (Units) ————————————— 20,000

Unit Selling price ——————————— Tk 10.00

Unit Variable costs ——————————- Tk 4.00

Fixed cost (Annual) —————————— Tk 70,000

Required : (1) C.M per unit.  (2) C.M.  (3) Sales. (4) V.C  (5) F.C  (6) EBIT/ Profit.

(7) EBIT ratio / Profit ratio. (8) C.M ratio/PV ratio.  (9) BEP (unit).  (10) BEP (Tk).

(11) BEP (sales).  (12) M/S (Tk) (13) M/S ratio.  (14) Target sales.

[ Ans : (1) 6 Tk per unit.  (2) 1,20,000 Tk.  (3) 2,00,000.  (4) 80,000.  (5) 70,000.  (6) 50,000.  (7) 25%  (8) 60%.  (9) 11,667 unit.  (10) 1,16,670  (11) 1,16,667  (12) 83,333    (13) 42%   (14) 20,000 ]

 

Ex- 02. The operational data of A-Company are given below :

Initial sales (Unit) ———————————— 30,000

Selling price per unit ——————————— Tk 15

Variable cost per unit ——————————— Tk 9

Fixed cost (Annual) ———————————- Tk 50,000

Requirement : (1) C.M per unit.  (2) C.M.  (3) Sales. (4) V.C  (5) F.C  (6) EBIT/ Profit.

(7) EBIT ratio / Profit ratio. (8) C.M ratio/PV ratio.  (9) BEP (unit).  (10) BEP (Tk)

(11) BEP (sales).  (12) M/S (Tk)   (13) M/S ratio. (14) Target sales.

[ Ans : (1) 6 Tk per unit.  (2) 1,80,000.  (3) 4,50,000. (4) 2,70,000. (5) 50,000.  (6) 1,30,000.  (7) 28.88% (8) 40%.  (9) 8,333.  (10)1,25,000 (11) 1,25,000  (12) 3,25,000    (13) 72%  (14) 30,000]

 

Ex-03. Orion Infusion Ltd. Produces and sells  10,000 units per year.

The selling price per product is Tk 150

Variable Cost per product is Tk 40

Total Fixed Cost is Tk 2,20,000

Determine :

(i) C/M or P/V ratio.  (ii) BEP units.  (iii) BEP (Tk). (iv) M/S Tk (v) M/S ratio. (vi) Target profit.

[Ans :- (i) 73.33%  (ii) 2,000 unit  (iii) 3,00,000  (iv) 12,00,000 (v) 80%  (vi) 10,000 ]

 

Ex- 04. The total production of M.N. Co. is 40,000 units. The selling price per unit is Tk 200 and the variable cost per unit is Tk 40. The annual fixed cost is Tk 12,00,00.

Require : i) C/M or P/V ratio.  (ii) BEP units.  (iii) BEP (Tk). (iv) M/S Tk (v) M/S ratio. (vi) Target profit.

[ Ans :- (i) 80%  (ii) 7,500 unit  (iii) 3,00,000  (iv) 15,00,000 (v) 81.25%  (vi) 40,000 ]

 

Ex- 05. You are given the following data related to Max. Co. Ltd.

Net sales : Tk 40,00,000

Variable cost : Tk 8,00,000

Fixed Cost : Tk 5,00,000

Compute : (a) Break Even sales in Tk. (b) Net profit.     [ Ans :- (a) 6,25,000.  (b) 27,00,000 ]

Ex- 06. You are given the following data related to Rakib. Co. Ltd.

Net sales : Tk 1,50,000

Variable cost : Tk 50,000

Fixed Cost : Tk 50,000

Compute : (a) Break Even sales in Tk. (b) Net profit.  [ Ans :- (a) 75,000.  (b) 50,000 ]

Ex- 07. The following figures for profit and sales are obtained from the account of ‘X’ Co. Ltd:-

Year                        Sales (Tk)                         Profit (Tk)

2013                          20,000                               1,000

2014                          30,000                               3,000

Calculate (1) Profit Volume ratio.  (2) BEP.  (3) Profit when sales Tk 40,000.

(4) Sales to earn a profit of Tk 5,000.

[ Ans :- (1) 20%.  (2) 15,000   (3) 5,000  (4) 40,000  ]

 

Ex- 08. The trading results of the manufacturing Co. are given below :

Year                        Sales (Tk)                         Profit (Tk)

2010                         2,00,000                             80,000

2011                         4,00,000                          2,00,000

Calculate (1) Profit Volume ratio.  (2) BEP.  (3) Profit when sales Tk 80,000.

(4) Sales to earn a profit of Tk 8,000.

[ Ans :- (1) 60%.  (2) Tk 66,667   (3) 5,000  (4) 80,000  ]

 

Ex-09. Following Data Related to the G.M. Co Ltd.

Net Sales Tk 2,00,000

Variable Cost Tk 1,00,000

Fixed cost Tk 60,000

Required : (1) BEP (Tk)  (2) M/S ratio.  (3) P/V or C/M ratio.  (4) Net- Profit ratio.

[ Ans : (1) 1,20,000. (2) 40%.  (3) 50%.  (4) 20%. ]

 

Ex- 10. Esquire Electronics Ltd. Provided you with the following Data :

Particulars Taka
Total Sales 4,00,000
Total Fixed Cost 60,000
Total Variable Cost 1,00,000

Determine the:-

(1) BEP in taka.   (2) P/V ratio.  (3) M/S (Tk)  (4) M/S ratio.

[ Ans : Tk 80,000   (2) 75%  (3) Tk 3,20,000   (4) 80%  ]

 

Ex- 11. Following information related to the Co ‘X’ :

Year Sales Tk Profit Tk
2013 20,000 2,000
2014 30,000 4,000

Determine the : (1) C/M ratio.  (2) Fixed Cost.  (3) BEP sales.  (4) Profit at Sales level of Tk 40,000.  (v) Sales to even a profit of Tk 5,000.

[ Ans :- (1) 20%  (2) Tk 2,000  (3) Tk 10,000   (4) Tk 6,000  (5) Tk 35,000  ]

 

Ex-12. The operating results of a Cardboard manufacturing company for the last two years are as under :

Year Sales Profit
2003 2,70,000 45,000
2004 3,00,000 60,000

Based upon the above information calculate the following :

(1) P/V ratio  (2) Fixed Cost.  (3) Break Even Point.  (4) Variable Cost  (5) Margin of Safety at a Profit of Tk 65,000. [Ans :- (1) 50%  (2) Tk 90,00  (3) Tk 1,80,000 (4) For-2003 Tk 1,35,000. For 2004 Tk 1,35,000]

Ex- 13. The C/M Ratio of a company is 40% and the Margin of Safety is 20%. If the fixed cost is found to be Tk 24,000 for a year, you are required to calculate :

  • Break-Even sales in Tk. [ Ans :-    Tk 60,000 ]
  • Total sales for the year.   [ Ans :-    Tk 75,000  ]
  • Profit for the year and. [ Ans :-    Tk 6,000     ]
  • The variable cost for the year. [ Ans :-   Tk 45,000  ]

 

Ex- 14. The C/M Ratio of a company is 80% and the Margin of Safety is 40%. If the fixed cost is found to be Tk 48,000 for a year, you are required to calculate :

  • Break-Even sales in Tk. [ Ans :-  Tk 60,000      ]
  • Total sales for the year. [ Ans :-   Tk 1,00,000  ]
  • Profit for the year and. [ Ans :-   Tk 32,000      ]
  • The variable cost for the year. [ Ans :-   Tk 20,000      ]

 

Ex-15. You are given the following information :

Sales                                       Tk 10,00,000

P/V ratio                                       40%

M/S ratio                                       25%

Find out : (i) BEP in Tk.  (ii) Profit in Tk.  (iii) Variable cost in Tk.

[ Ans :- (i) 7,50,000 Tk.  (ii) 1,00,000 Tk.  (iii) 6,00,000 Tk.  ]

 

Ex-16. You are given the following information :

Sales                                       Tk 12,00,000

P/V ratio                                      50%

M/S ratio                                     30%

Find out : (i) BEP in Tk.  (ii) Profit in Tk.  (iii) Variable cost in Tk.

[ Ans :- (i) 8,40,000 Tk.  (ii) 1,80,000 Tk.  (iii)7,80,000 Tk.  ]

 

Ex- 17. Total sales of a production Co. is Tk 2,00,000 margin of safety is Tk 80,000 C/M ratio 40%. Determine (i) Profit of the Co.  (ii) Total variable cost.

[ Ans :- (i) 32,000 Tk.  (ii) 1,20,000 Tk. ]

 

Ex- 18. Total sales of a production Co. is Tk 1,50,000 margin of safety is Tk 65,000 C/M ratio 35%. Determine (i) Profit of the Co.  (ii) Total variable cost.

[ Ans :- (i) 22,750 Tk.  (ii) 97,500 Tk. ]

Ex-19. The operating results of Najia Enterprise are given below:-

Sales for 2015 and 2016 are Tk 5,00,000 and Tk 8,00,000 respectively. Profit for 2015 id Tk 1,00,000 and for 2016 is Tk 1,75,000.

Reqiired :- (i)  P/V ratio.  (ii0 Fixed cost.   [ Ans :- (i) 25%.  (ii) 25,000 Tk ]

 

Ex-20. The operating results of Najia Enterprise are given below:-

Sales for 2020 and 2021 are Tk 7,00,000 and Tk 10,00,000 respectively. Profit for 2020 in Tk 2,00,000 and for 2021 is Tk 2,75,000.

Reqiired :- (i)  P/V ratio.  (ii0 Fixed cost.   [ Ans :- (i) 25%.  (ii) -25,000 Tk ]

Part- C

Ex- 01. The operating results of a company for the last two years were as follows:-

Particulars 2011 (Tk) 2012 (Tk)
Sales 6,00,000 10,00,000
Profit (Loss) (60,000) 1,00,000

Based upon the above information calculate the following:-

  • Contribution margin ratio.
  • Amount of fixed expenses.
  • Break-even point.
  • Amount of profit increase/decrease if sales are increasing by Tk 1,00,000.
  • Amount of profit increase/decrease if sales are decreasing by Tk (-60,00)
  • The margin of safety at a profit of Tk 60,000.

[ Ans :- (i) 40%.  (ii) 3,00,000 Tk. (iii) 7,50,000 Tk.  (iv) 1,00,000 Tk. (v) (-60,000) (vi) 1,50,000 Tk ]

 

Ex- 02. The operating results of a company for the last two years were as follows:-

Particulars 2015 (Tk) 2016 (Tk)
Sales 5,00,000 9,00,000
Profit (Loss) (50,000) 90,000

Based upon the above information calculate the following:-

  • Contribution margin ratio.
  • Amount of fixed expenses.
  • Break-even point.
  • Amount of profit increase/decrease if sales are increasing by Tk 90,000.
  • Amount of profit increase/decrease if sales are decreasing by Tk (-55,00)
  • The margin of safety at a profit of Tk 70,000.

[ Ans :- (i) .35 (ii) 2,25,000 Tk. (iii) 6,42,857 Tk. (iv) 90,000 Tk. (v)  (vi) (-50,000 Tk  (vi) 2,00,000 ]

 

Ex- 03. The following data is extracted from the books of a company.

Annual sales Tk 2,20,000

The margin of safety ratio is 35%

Profit volume ratio 45%

You are to ascertain:-

  • Break-even sales in Tk.                                               [ Ans :- 1,43,000  Tk  ]
  • The margin of safety in Tk. [ Ans :- 77,000 Tk
  • Annual profit. [ Ans :- 34,650 Tk ]
  • Sales required to earn a profit of Tk. 40,000.                 [ Ans :- 2,31,889 Tk ]
  • Profit on sale of Tk 1,20,000.               [ Ans :- (-10,350) Loss. ]

Ex- 04. The following data is extracted from the books of a company.

Annual sales Tk 3,00,000

The margin of safety ratio is 45%

Profit volume ratio 55%

You are to ascertain:-

  • Break-even sales in Tk.                                               [ Ans :- 1,65,000 Tk  ]
  • The margin of safety in Tk.                  [ Ans :- 1,35,000  Tk
  • Annual profit.                  [ Ans :- 74,250 Tk ]
  • Sales required to earn a profit of Tk. 50,000.                 [ Ans : 2,55,909  Tk ]
  • Profit on sale of Tk 1,50,000.               [ Ans :- (-8,250)  ]

Ex-05. A company collected the following data for the second quarter of the year:-

Months                              Sales (Tk)                   Costs (Tk)

April                                   70,000                           56,000

May                                    77,000                           59,990

June                                    85,000                           64,550

Required:-

  • Variable costs per unit in Tk.                        [ Ans:- 57%  ]
  • The fixed costs. [ Ans:- 16,100 ]
  • The break-even point on Tk. [ Ans:- 37,442 ]
  • July profit if sales Tk 80,000. [ Ans:- 18,300 ]

 

Ex-06. A company collected the following data for the second quarter of the year:-

Months                              Sales (Tk)                   Costs (Tk)

April                                   64,000                           55,000

May                                    75,000                           60,500

June                                    80,000                           63,000

Required:-

  • Variable costs per unit in Tk.                      [ Ans:- .50  ]
  • The fixed costs.                                                    [ Ans:- 23,000 ]
  • The break-even point on Tk. [ Ans:-   46,000  ]
  • July profit if sales Tk 80,000. [ Ans:-    17,000   ]

 

Management Accounting (In English )
Chapter-3

Absorption and Variable Costing
(cwi‡kvlY I cwieZ©bkxj e¨q )
m~G :
01. Calculation of Opening, Closing, Production unit, and Sales unit.
Opening + Production = Sales + Closing.
Opening = Sales + Closing – Production.
Production = Sales + Closing – Opening.
Sales = Opening + Production –Closing.
Closing = Opening + Production – Sales.
02. Manufacturing cost per unit.
Particular Absorption Variable
Direct Material
Direct Labor
Variable overhead
Fixed factory overhead (
Cost per unit.

Management Accounting (In English )
Chapter-3

03. Forma for Income Statement under absorption Costing :
Name of Company
Income Statement under Absorption Costing
For the period ended…
Particulars Taka Taka
Sales (
(-) Cost of goods sold:
Beginning / Opening Investment (
+) Production Cost/Cost of goods manufactured (
Cost of goods available for sales —
(-) Closing /Ending Inventory –
Gross Margin/Gross Profit —
(-) Operating / Periodic Cost:
Variable marketing and administrative expenses —
Fixed Marketing/Selling/Administrative expenses –
Net profit —

Management Accounting (In English )
Chapter-3

05. Forma for Income Statement under Variable Costing:
Name of the Company
Income Statement under Variable Costing
For the period ended…
Particulars Taka Taka
Sales (
(-) Variable Cost of goods sold:
Beginning/Opening Investment (
(+) Production Cost/Cost of goods manufactured (
Variable Cost of goods available for sales —
(-) Closing /Ending Inventory (
Gross Contribution Margin —
(-) Variable Marketing/Selling/ Commercial /Administrative expenses-
Net Contribution Margin ———

Net profit ——

Management Accounting (In English )
Chapter-3

04. Reconciliation statement
Particular Tk Tk
Change in Profit :
Profit under Absorption –
Profit under Variable –
Change in Inventory ( Closing – Opening )
Inventory under Absorption
Inventory under Variable.

Leave a Reply

Your email address will not be published.