The analysis of cost sheet of A Ltd. for the last financial year has revealed the following information for it's product R: Elements of Cost…

Workings: Calculation of Cost of Goods Sold (COGS): COGS = {(DM- 0.3 COGS) + (DL- 0.15 COGS) + (FOH- 0.10 COGS +2,30,000) + (G&AOH- 0.02 COGS +71,000)} Or COGS = 0.57 COGS +3,01,000 Or COGS = 3,01,000 / 0.43 = 7,00,000 Calculation of Cost of Sales (COS): COS = COGS + (S&DOH- 0.04 COS +68,000) Or COS = 7,00,000 + (0.04 COS +68,000) Or COS = 7,68,000 / 0.96 = 8,00,000 Calculation of total Fixed Costs: Factory Overhead 2,30,000 General & Administration OH 71,000 Selling & Distribution OH 68,000 3,69,000 Calculation of Variable Costs: Direct Material (0.3 × ₹ 7,00,000) 2,10,000 Direct Labour (0.15 × ₹ 7,00,000) 1,05,000 Factory Overhead (0.10 × ₹ 7,00,000) 70,000 General & Administration OH (0.02 × ₹ 7,00,000) 14,000 Selling & Distribution OH (0.04 × ₹ 8,00,000) 32,000 4,31,000 Calculation of P/V Ratio: P/V Ratio = Contribution / Sales ×100 = (Sales-Variable Costs) / Sales ×100 = (₹ 185×5,000 units)-4,31,000 /185×5,000 units ×100 = 53.41% (i) Break-Even Sales = Fixed Costs / P/V Ratio = 3,69,000 / 53.41% = 6,90,882 (ii) Profit earned during the last year = (Sales - Total Variable Costs) – Total Fixed Costs = (₹ 9,25,000 -4,31,000) -3,69,000 = 1,25,000 (iii) Margin of Safety (%) = (Sales-Breakevensales) / Sales ×100 = (₹ 9,25,000-6,90,882) /9,25,000 ×100 = 25.31% (iv) Profit if the sales were 10% less than the actual sales: Profit = 90% (₹ 9,25,000 -4,31,000) -3,69,000 = 4,44,600 -3,69,000 = 75,600