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Q1. Discuss the various uses for Break-Even Analysis?
Ans: Uses for Break-Even analysis are as follows:[a] Financial
Decision Making,[b]Determination t e !ontrib"tion Margin,[c] Fi#e$
!ost an$ %ariable !ost,[$] &'% (atio an$ !'M (atio, an$[e]
Margin of )afety (atio*
Q2.Solution:
+i Degree of .erating /everage +D /
0 EBIT
CM 0
EBIT t VaribleCosTotalSales
0 111,231111,241111,351
0 111,231111,561
02 times Ans*
+ii Degree of Financial /everage +DF/ 0 times EBT EBIT
3*2111,411111,231
== Ans*
+iii Degree of !ombine$ /everage +D!/ 0times
EBT st VariableCoTotalSales
EBT CM
6*5111,411111,561
111,411111,241111,351
==
=
= Ans*
+iv Break-Even &oint in "nits
= unitstperunit Variableeperunit Salingproc FixedCost
111,4547
111,231325
111,231cos
==
=
Ans*
89* at are t e t ree .rimary sections of t e statement of cas
flow;
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AB! !om.any!as flow statement "n$er in$irect met o$
For t e year en$e$ at 94 st December&artic"lars Amo"nt +>
Amo"nt+>
Cash flo fro! o"eratin# activities:$i% &et inco!e$ii%
&on cash e'"enses or
non cash char#e: De.recation
/oss on sales of ol$ assets$iii% Chan#e in current assets :
Decrease in acco"nt receivable
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+i !"rrent (atio 0 67*4111,2A1111,691
==
s LiabilitieCurrent Total
Asset Current Total :4 Ans*
+ii Aci$-=est (atio0 A1*1111,2A1111,4@7111,691
=
=
s LiabilitieCurrent Total Inventory Assest nt TotalCurre
:4 Ans*
+iii Average !ollection &erio$ 0
daysdays
Sales Net ceivable Account Averagedays
67*51111,211,4
2111,467111,476
9@5(e9@5=
+
= Ans*
+iv
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F"t"re %al"e +F% 9 9A7223194A51@2
1@14A51@
24 6222 . , . ) .( , )
.( , )( T&
i ' n ==+=+
Again, for t e t ir$ year ere &0 .rinci.al amo"nt0=k*3,722*9
, n0 n"mber of year04, i0 rate of interest0 01*1
F"t"re %al"e +F% 46562716542A722321A1
42A722324 2422
. , . ) .( . , )
.
( . , )( T&
i
' n
==+=+=
So t e re?"ire$ !om.o"n$
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= e maGor benefits to be gaine$ from b"$geting are as follows:
B"$get[a] Force manager to .lan,[b] &rovi$es information t at
can be "se$ to im.rove t e $ecision making,[c]
