- 20 Marks
MI – May 2016 – L1 – SB – Q3 – Cost-Volume-Profit (CVP) Analysis
Perform various CVP calculations including break-even point, profit, margin of safety, and contribution for a product.
Question
HEALTH-GRACE limited produces one standard product called Bambino Syrup which sells at ₦20.00 per bottle. The trading results for the six months ended June 30, 2015 were as follows:
| Month | Sales (Units) | Profit / Loss (₦) |
|---|---|---|
| January | 120,000 | 80,000 |
| February | 140,000 | 120,000 |
| March | 60,000 | (40,000) |
| April | 96,000 | 32,000 |
| May | 104,000 | 24,000 |
| June | 72,000 | 16,000 |
From the above information, you are required to calculate the following:
a. Break-even point in units and Naira value. (2 Marks)
b. Fixed cost. (2 Marks)
c. Variable cost per unit. (8 Marks)
d. Profit volume ratio. (2 Marks)
e. Contribution, assuming 70,000 bottles are sold. (2 Marks)
f. Margin of safety assuming 90,000 bottles are sold. (1 Mark)
g. The number of bottles to be sold to generate a profit after tax of ₦70,000 assuming the tax rate is 30%. (3 Marks)
Find Related Questions by Tags, levels, etc.
- Tags: Break-even Analysis, CVP Analysis, Marginal Safety, Profitability
- Level: Level 1
- Topic: Cost-Volume-Profit (CVP) Analysis
- Series: MAY 2016
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