CMA Foundation · Fundamentals of Financial and Cost Accounting · Application of Cost Accounting for Business Decisions
Sundaram Traders sells a product at ₹80 per unit. Variable cost is ₹50 per unit and fixed cost is ₹90,000 per period. If 4,500 units are sold, what is the profit for the period?
Profit is ₹45,000. Contribution per unit is ₹30 (80 minus 50), so 4,500 units give ₹1,35,000 contribution. Deducting fixed costs of ₹90,000 leaves ₹45,000 profit for the period.
- A₹45,000Correct
- B₹1,35,000
- C₹2,70,000
- D₹1,80,000
Explanation
Contribution per unit = 80 - 50 = ₹30. Total contribution = 4,500 x 30 = ₹1,35,000. Profit = 1,35,000 - 90,000 = ₹45,000. The figure ₹1,35,000 ignores fixed cost.
Did you get it right without looking?
One question tells you little. A timed set on Application of Cost Accounting for Business Decisions shows your real accuracy, how long you take and where you lose marks.
More Application of Cost Accounting for Business Decisions questions
- Mehta Ltd sells two products in a fixed mix of 2 units of X to 1 unit of Y. X sells at Rs 100 with variable cost Rs 60; Y sells at Rs 150 wi…
- Verma Ltd. has a P/V ratio of 40% and fixed costs of ₹6,00,000. Actual sales are ₹20,00,000. What is the margin of safety in rupees?
- A budget that is designed to change in accordance with the level of activity actually attained is called a:
- Which of the following changes would reduce the break-even point in units, other things remaining constant?
- A firm has sales of ₹8,00,000, variable costs of ₹4,80,000 and fixed costs of ₹2,00,000. What is the margin of safety as a percentage of sal…
- A company's sales are Rs 8,00,000, variable costs are Rs 5,00,000 and fixed costs are Rs 1,50,000. What is its margin of safety as a percent…