BASales1602008040Direct material2432163Direct Wages4048328Factory overheads4864408Selling and admin243012expensesProfit/loss2426|(20)1540% of factory overheads vary at normal volumes and the selling and administation overheads vary atthe extent of 5% of sales.20% of sales of product "C"is done in conjunction with productÄ" and as muchas the discontinuance of product "C"will bring down the sales of product" A" by 10%(Answer Part 2)1. Prepare a contribution format income statement and in view of loss reported for product C, themanagement is considering discounting it. In that eventthe company can save a su of Rs.8million in fixed expenses What is the financial implication of discounting product C.2. The P/V ratio of a company is 50% and the margin of safety is40% You are required to calculate the BEP and the net profit ifthe volume of sales is Rs.800,000/-6.

PV Ratio = ContributionSales×100 Margin of Safety = Current Sales - Breakeven SalesCurrent Sales×100

Answered: The P/V ratio of a company is 50% and…

The P/V ratio of a company is 50% and the margin of safety is 40% You are required to calculate the BEP and the net profit if the volume of sales is Rs.800,000/-

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

B
A
Sales
160
200
80
40
Direct material
24
32
16
3
Direct Wages
40
48
32
8
Factory overheads
48
64
40
8
Selling and admin
24
30
12
expenses
Profit/loss
24
26
|(20)
15
40% of factory overheads vary at normal volumes and the selling and administation overheads vary at
the extent of 5% of sales.20% of sales of product "C"is done in conjunction with productÄ" and as much
as the discontinuance of product "C"will bring down the sales of product" A" by 10%
(Answer Part 2)
1. Prepare a contribution format income statement and in view of loss reported for product C, the
management is considering discounting it. In that eventthe company can save a su of Rs.8
million in fixed expenses What is the financial implication of discounting product C.
2. The P/V ratio of a company is 50% and the margin of safety is
40% You are required to calculate the BEP and the net profit if
the volume of sales is Rs.800,000/-
6.

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