ABC Ltd. provides the following information regarding the cost of the product. Direct materials ₹ 20,000 Direct Wages ₹ 16,000 Variable Factory Overhead: 25% of wages Variable Administration Overhead: 10% of the factory

Calculation for ABC Ltd. 1. Statement of Marginal Cost: Particulars Amount (₹) Direct Material 20,000 Direct Wages 16,000 Prime Cost 36,000 Variable Factory Overhead (25% of wages = 25% of ₹ 16,000) 4,000 Marginal Factory Cost 40,000 Variable Administrative Overhead (10% of factory cost = 10% of ₹ 40,000) 4,000 Marginal Cost of Production 44,000 Variable Selling & Distribution Overhead (1,000 units × ₹ 4) 4,000 Total Variable Cost (Marginal Cost) 48,000 Sales (1,000 units × ₹ 64) 64,000 2. Calculation of Ratios: (i) Profit-Volume (P/V) Ratio: P/V Ratio = (Sales - Variable Cost) / Sales × 100 P/V Ratio = (₹ 64,000 - ₹ 48,000) / ₹ 64,000 × 100 P/V Ratio = (₹ 16,000 / ₹ 64,000) × 100 = 25% (ii) Break-Even Point (BEP): BEP (in ₹) = Fixed Costs / P/V Ratio Fixed Overhead = ₹ 8,000 BEP (in ₹) = ₹ 8,000 / 0.25 = ₹ 32,000 (iii) Margin of Safety (MOS): MOS (in ₹) = Sales - Break-Even Sales MOS (in ₹) = ₹ 64,000 - ₹ 32,000 = ₹ 32,000 (iv) Profit: Profit = (Sales × P/V Ratio) - Fixed Costs Profit = (₹ 64,000 × 25%) - ₹ 8,000 Profit = ₹ 16,000 - ₹ 8,000 = ₹ 8,000