Question

CVP analysis and Breakeven analysis 

06 Sep 2023
Answer :
Word Count : 474

Cost-Volume-Profit (CVP) analysis and Break-even analysis are both financial tools used by businesses to assess their financial performance and make informed decisions. However, they have distinct differences in terms of their scope, purpose, and the information they provide. Here's a breakdown of the key differences between CVP analysis and Break-even analysis:

  1. Scope:

    • CVP Analysis: CVP analysis, which stands for Cost-Volume-Profit analysis, is a broader financial analysis tool. It examines how changes in sales volume, selling _________ ______ ____ ____ ______ _________.
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Related Questions

CVP analysis and Breakeven analysis 

Explain how the variance analysis relating to overheads differ from that relating to material and labour

Following in the Trial Balance of a limited Company as at 31st December, 2021

Particulars Debit Credit
Share Capital   4,00,000
Cash in hand 6,200  
Rent 5,300  
Prepaid Expenses 4,600  
Repairs & Maintenance 8,600  
Advances from Customers   50,000
General Reserve   3,00,000
Raw Materials at Cost 2,67,000  
Sundry Creditors 3,40,000  
Plant and Machinery 4,30,000  
Power 8,800  
Travelling and Conveyance 4,100  
Auditors’ Fees 1,500  
Cash at Bank 8,000  
Land 30,000  
Provision for Taxation 2,10,000  
Furniture 12,200  
Staff advances 5,300  
Sundry Debtors 1,40,000  
Misc. Income 54,600  
Finished Goods at cost 3,10,000  
Income-tax Advances 3,00,000  
Misc. Expenses 61,400  
Raw Materials Consumption 28,60,000  
Sales 42,30,000  
Development Rebate Reserve 1,00,000  
Building 74,100  
Salaries, Wages &Bonus 11,60,000  
Cash Credit from Bank 12,500  
Total 56,97,100 56,97,100

The following additional information is also available:

i) The authorized capital of the company is 80,000 equity shares of Rs. 10 each
of which 50% has been issued and has been recommended by the directors.
ii) A dividend of 15% on the paid-up capital has been recommended by the
directors.
iii) The closing stock of finished goods at cost is Rs. 5,60,000.
iv) The development rebate reserve is no longer required.
v) Depreciation on plant and machinery amounting to Rs. 43,000 on furniture
amounting to Rs. 1,300 and on building amounting to Rs. 3,800 has been
debited to miscellaneous expenses.
vi) Surplus in profit and loss account after proposed dividends, is to be transferred
to general reserve.
vii) Income-tax assessment for a prior year has been completed, fixing the income
tax liability at Rs. 1,55,000 (against which a provision of Rs. 80,000 and
advances of income tax of Rs. 70,000 exists in the books).
You are required to prepare:
i. Profit and loss account for the year ended 31st December, 2004; and
ii. Balance sheet in the prescribed form as on that date.

The Standard Cost of Chemical mixture ‘PQ’ is as follows:
40% of material P @ Rs.400 per kg. 60% of material Q @ Rs.600 per kg.
A standard loss of 10% is normally anticipated in production.
The following particulars are available for the month of March, 2004.
180 kgs of material P have been used @ Rs.680 per kg
220 kgs of material Q have been used @ Rs.360 per kg.
The actual of production of ‘PQ’ was 369 kgs.
Calculate the following variances:
a) Material Price Variance
b) Material Usage Variance
c) Material Mix Variance
d) Material Yield Variance

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