**FORMULAS IN B-E-P ANALYSIS**

**1)**

**Profit =**Total sales or Revenue – Total cost (or)

Sales – (Fixed
cost + Variable cost) (or)

Sales – Fixed cost – variable cost

**2)**

**Contribution =**Sales – Variable cost (or)

Fixed Cost + Profit

**Contribution = Sales – V.C = F.C + Profit**

**3)**

**Variable cost or Marginal cost =**Direct Material + Direct Labor +Direct Expenses

**4)**

**B.E.P (Units)**=

__Fixed cost (FC)__

Contribution(C)

(Or)

__Fixed Cost__(or)__Fixed Cost__
Sales – variable cost
F.C+ profit

**5)**

**B.E.P (Value or Rupees)**=

__Fixed cost × Sales__(or)

__FC×S__

Sales – variable cost
Contribution

**B.E.P(value) = BEP in Units × Selling price per unit**

**6)**

**P/V Ratio or Profit/volume ratio =**

__Contribution__× 100

Sales

**7)**

**P/v Ratio ( when two years data given)**=

__Change in profit__×100

Change in sales

**8)**

**BEP is calculated with the help of P/V Ratio =**

__Fixed cost__

P/v Ratio

**9)**

**F.C and V.C is calculated with help of following formulas:**

Fixed cost = Sales × P/v Ratio – Profit

Variable cost = Sales × (1 – P/v Ratio)

**10)**

**Number of units required to earn Desired profit:**

__Fixed Cost + Desired profit__

Contribution

**11)**

**Sales required for Desired profit**=

__Fixed cost + Desired profit__× Sales

Sales – Variable Cost

(or) with the help of p/v Ratio =

__Fixed cost +Desired profit__
P/V Ratio

**12)**

**Margin of Safety (MOS)**= Actual sales – BEP sales (or)

=

__Profit__
P/V Ratio

**13)**

**MOS Ratio**=

__MOS__× 100

Sales

**MOS is the safety margin how much output or sales level can fall before a business reaches its BEP.**

__Note:__

__PROBLEM ON BREAK-EVEN POINT ANALYSIS__
1)From the
following data calculate BEP .

Selling
price per unit = 50 Rs.

Variable
cost per unit= 30 Rs.

Fixed Cost
= 200000 Rs.

**Answer: 10000 Units**

2)From the
following information find out the amount of profit earned during the year

Fixed cost
= 500000 Rs.

Selling
price per unit = 15 Rs.

Variable
cost per unit = 10 Rs.

Output
level = 150000 units

**Answer: 250000 Rs**

3)From the
following data, calculate Break-even point.

Sales =
800000 Rs.

Fixed
Expenses 200000 RS

__Variable expenses:__

Direct
material = 180000

Direct
Labor = 120000

Other
variable

Expenses = 100000

___________

Total
VC =
400000 Rs.

____________

**Answer:400000 Rs**

4)Calculate
BEP with the help of following details:

Sales = 500000 Rs.

Fixed
cost = 100000 Rs.

Profit = 150000 Rs.

**Answer: 200000 Rs.**

5)Calculate
Margin of safety (MOS) and P/v ratio
with the help of following data:

Sales = 300000 Rs.

Fixed
Expenses = 75000 Rs.

__Variable Expenses__

Direct Material = 100000 Rs.

Direct
Labor = 60000 Rs.

Direct
expenses = 40000 Rs.

**Answer: BEP = 225000 Rs.**

**MOS = 75000 Rs.**

6)
Determine the amount of fixed cost or expenses and also calculate BEP sales from
the following particulars.

Sales = 500000 Rs.

Direct
Material = 150000 Rs.

Direct
labor = 120000 Rs.

Direct
Expenses= 60000 Rs.

Profit = 70000 Rs.

**Answer : Fixed Cost = 100000 Rs.**

**BEP sales = 294118 Rs.**

7) From
the following figures calculate sales required to earn a desired profit of
120000 Rs.

Sales = 600000 Rs.

Variable
cost = 375000Rs.

Fixed
cost = 180000 Rs.

**Answer: Sales required : 800000 Rs**.

8) From
the following data calculate Number of units that must be sold to earn a profit of 150000 Rs.

Selling
price per Unit = 50Rs.

Variable
cost per Unit = 30Rs.

Fixed
cost = 200000 Rs

**Answer: No of units required :17500 Units**

9) The
operating results of a company for the last two years are as follows:

__YEAR__

__SALES(Rs)__

__PROFIT(Rs)__

2004 270000 6000

2005 300000 9000

Calculate
1) P/v ration 2) BEP

**Answer: P/v Ratio = 10%**

**BEP = 210000 Rs**

**Contribution = 27000 Rs.**

10)
calculate BEP in terms of units and in terms of sales from the following
particulars:

Fixed
cost = 300000 Rs.

Variable
cost per Unit = 15 Rs.

Selling
Price Per Unit = 20 Rs.

**Answer: BEP Units = 60000 : Rupees: 1200000 Rs.**

11) the
following data are obtained from the records of a manufacturing company:

__YEAR__

__SALES(Rs)__

__PROFIT(Rs)__

2009 80000
10000

2010 90000
14000

Calculate
1) P/v ration 2) BEP

**Answer: P/V Ratio = 40%**

**BEP = 55000 Rs.**

12) The
operating result of a company for the last Two periods are as follows:

__PERIOD__

__SALES(Rs)__

__PROFIT(Rs)__

I 270000 6000

II
300000 15000

Calculate:
1) P/v ration

2) BEP

3) Sales required to earn a
profit of 20000 Rs.

4) Profit when the sales are
500000 Rs.

**Answer: P/v Ratio = 30%, BEP = 250000 Rs.**

**Sales required= 316667 Rs.**

**Profit required = 75000 Rs.**