Daily Answer Writing Practice for Commerce Optional UPSC (Mains)- Day 58

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#Q.1) The following figures are related to LM Limited for the year ending 31st March, 2014 :

Sales – 24,000 units @  Rs. 200 per unit;

P/V Ratio 25% and Break-even Point 50% of sales.

You are required to calculate:

(i) Fixed cost for the year

(ii) Profit earned for the year

(iii) Units to be sold to earn a target net profit of  Rs.11,00,000 for a year.

(iv) Number of units to be sold to earn a net income of 25% on cost.

(v) Selling price per unit if Break-even Point is to be brought down by  Rs.4,000.- 20 marks

#Q.2) Zed Limited sells its product at Rs. 30 per unit. During the quarter ending on 31st March, 2014, it produced and sold 16,000 units and’ suffered a loss of Rs. 10 per unit. If the volume of sales is raised to 40,000 units; it can earn a profit of Rs. 8 per unit.
You are required to calculate:
(i) Break Even Point in Rupees.
(ii) Profit if the sale volume is 50,000 units.
(iii) Minimum level of production where the company needs not to close the production if unavoidable fixed cost is Rs. 1,50,000.- 20 Marks


#Q.3) A company gives the following information:
Margin of Safety Rs.3,75,000
Total Cost  Rs. 3,87,500
Margin of Safety (Qty.) 15,000 units
Break Even Sales in Units 5,000 units

You are required to calculate:
(i) Selling price per unit
(ii) Profit
(iii) Profit/ Volume Ratio
(iv) Break Even Sales (in Rupees)
(v) Fixed Cost- 20 marks