Exercise 4: From the following particulars, calculate Margin of safety: Fixed cost OMR. 100,000 Variable cost OMR. 150,000 Total Sales OMR. 300,000 Exercise 5: Break-even point = OMR. 30,000 Profit = OMR. 1,500 Fixed cost = OMR. 6,000 What is the amount of variable cost? Exercise 6: Sales = 4,000 units @ OMR. 10 per unit
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Exercise 4:
From the following particulars, calculate Margin of safety:
Fixed cost OMR. 100,000
Variable cost OMR. 150,000
Total Sales OMR. 300,000
Exercise 5:
Break-even point = OMR. 30,000
Profit = OMR. 1,500
Fixed cost = OMR. 6,000
What is the amount of variable cost?
Exercise 6:
Sales = 4,000 units @ OMR. 10 per unit
Break-even point = 1,500 units
Fixed cost = OMR. 3,000
What is the amount of (a) variable cost; and (b) profit?
Exercise 7:
Fixed cost OMR. 8,000
Profit earned OMR. 2,000
Break-even sales OMR. 40,000
What are actual sales?
Exercise 8:
The following formation is given:
Sales = OMR. 200,000; Variable cost = OMR. 120,000; Fixed cost = OMR. 30,000.
Calculate
(a) Break-even point
(b) New break-even point if sales are reduced by 10%
(c) New break-even point if variable' cost increases by 10%
(d) New break-even point if fixed cost increases by 10%
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