Given LOSS Sells a variety of equpiment including the executive office chair Particulars Current No.of Units expected to sell the executive office chair 6000 Selling Price per executive office chair in $ 250 Current manufacturing costs in $ per unit 175 Current Fixed cost 3,60,000 Proposed Changes No.of Units expected to sell the executive office chair 6000 Selling Price per executive office chair in $ 250 Alternative manufacturing costs in $ per unit 75 Alternative Fixed cost 9,45,000 Sl Particulars Current Proposed A Sales 15,00,000 15,00,000 B Variable cost 10,50,000 4,50,000 C Contribution ( A - B ) 4,50,000 10,50,000 D Fixed cost 3,60,000 9,45,000 E Profit ( C - D ) 90,000 1,05,000 F price Volume Ratio % ( C/A * 100 ) 30% 70% G Break even Point Volume ( D/F) 12,00,000 13,50,000 H Contribution Per Unit ( C/6000 ) 75 175 I Break even Point Units ( D/H) 4800 5400 J Margin of safety sales ( A -G ) 3,00,000 1,50,000 K Margin of safety in Units ( J / selling Price pu ) 1200 600 L Margin of safety in Percentage ( J / A )*100 20% 10% Indiffernce point between two alternatives Indifference cost = point where there is no difference in cost between two alternatives Indifference point Units Assumptions Q = Quantity / units Cpu 1 = Contribution per unit for current alternative Cpu 2= Contribution per unit for proposed alternative FC 1 = fixed cost for current alternative FC 2 = fixed cost for Proposed alternative alternative Indifference point equation Cpu1 * Q - FC1 = Cpu2 * Q - FC2 = 75 * Q - 360,000 = 175 * Q -945,000 = 945,000 - 360,000 = Q ( 175 - 75 ) = 100 * Q = 585,000 = Q = 585,000/100 = Q = 5850 Units Therefore Indifference point is 5850 Units Given LOSS Sells a variety of equpiment including the executive office chair Particulars Current No.of Units expected to sell the executive office chair 6000 Selling Price per executive office chair in $ 250 Current manufacturing costs in $ per unit 175 Current Fixed cost 3,60,000 Proposed Changes No.of Units expected to sell the executive office chair 6000 Selling Price per executive office chair in $ 250 Alternative manufacturing costs in $ per unit 75 Alternative Fixed cost 9,45,000 Sl Particulars Current Proposed A Sales 15,00,000 15,00,000 B Variable cost 10,50,000 4,50,000 C Contribution ( A - B ) 4,50,000 10,50,000 D Fixed cost 3,60,000 9,45,000 E Profit ( C - D ) 90,000 1,05,000 F price Volume Ratio % ( C/A * 100 ) 30% 70% G Break even Point Volume ( D/F) 12,00,000 13,50,000 H Contribution Per Unit ( C/6000 ) 75 175 I Break even Point Units ( D/H) 4800 5400 J Margin of safety sales ( A -G ) 3,00,000 1,50,000 K Margin of safety in Units ( J / selling Price pu ) 1200 600 L Margin of safety in Percentage ( J / A )*100 20% 10% Indiffernce point between two alternatives Indifference cost = point where there is no difference in cost between two alternatives Indifference point Units Assumptions Q = Quantity / units Cpu 1 = Contribution per unit for current alternative Cpu 2= Contribution per unit for.

1. Given
LOSS Sells a variety of equpiment including the executive office chair
Particulars
Current
No.of Units expected to sell the executive office chair
6000
Selling Price per executive office chair in $
250
Current manufacturing costs in $ per unit
175
Current Fixed cost
3,60,000
Proposed Changes
No.of Units expected to sell the executive office chair
6000
Selling Price per executive office chair in $
250
Alternative manufacturing costs in $ per unit
75
Alternative Fixed cost
9,45,000
Sl
Particulars
Current
Proposed
A
Sales
15,00,000
15,00,000
B
Variable cost
10,50,000
4,50,000
C
Contribution ( A - B )

2. 4,50,000
10,50,000
D
Fixed cost
3,60,000
9,45,000
E
Profit ( C - D )
90,000
1,05,000
F
price Volume Ratio % ( C/A * 100 )
30%
70%
G
Break even Point Volume ( D/F)
12,00,000
13,50,000
H
Contribution Per Unit ( C/6000 )
75
175
I
Break even Point Units ( D/H)
4800
5400
J
Margin of safety sales ( A -G )
3,00,000
1,50,000
K
Margin of safety in Units ( J / selling Price pu )
1200
600
L
Margin of safety in Percentage ( J / A )*100

3. 20%
10%
Indiffernce point between two alternatives
Indifference cost = point where there is no difference in cost between two alternatives
Indifference point Units
Assumptions
Q = Quantity / units
Cpu 1 = Contribution per unit for current alternative
Cpu 2= Contribution per unit for proposed alternative
FC 1 = fixed cost for current alternative
FC 2 = fixed cost for Proposed alternative alternative
Indifference point equation
Cpu1 * Q - FC1 = Cpu2 * Q - FC2
=
75 * Q - 360,000 = 175 * Q -945,000
=
945,000 - 360,000 = Q ( 175 - 75 )
=
100 * Q = 585,000
=
Q = 585,000/100
=
Q = 5850 Units
Therefore Indifference point is 5850 Units
Given
LOSS Sells a variety of equpiment including the executive office chair
Particulars
Current
No.of Units expected to sell the executive office chair
6000
Selling Price per executive office chair in $
250
Current manufacturing costs in $ per unit
175
Current Fixed cost
3,60,000

4. Proposed Changes
No.of Units expected to sell the executive office chair
6000
Selling Price per executive office chair in $
250
Alternative manufacturing costs in $ per unit
75
Alternative Fixed cost
9,45,000
Sl
Particulars
Current
Proposed
A
Sales
15,00,000
15,00,000
B
Variable cost
10,50,000
4,50,000
C
Contribution ( A - B )
4,50,000
10,50,000
D
Fixed cost
3,60,000
9,45,000
E
Profit ( C - D )
90,000
1,05,000
F
price Volume Ratio % ( C/A * 100 )
30%

5. 70%
G
Break even Point Volume ( D/F)
12,00,000
13,50,000
H
Contribution Per Unit ( C/6000 )
75
175
I
Break even Point Units ( D/H)
4800
5400
J
Margin of safety sales ( A -G )
3,00,000
1,50,000
K
Margin of safety in Units ( J / selling Price pu )
1200
600
L
Margin of safety in Percentage ( J / A )*100
20%
10%
Indiffernce point between two alternatives
Indifference cost = point where there is no difference in cost between two alternatives
Indifference point Units
Assumptions
Q = Quantity / units
Cpu 1 = Contribution per unit for current alternative
Cpu 2= Contribution per unit for proposed alternative
FC 1 = fixed cost for current alternative
FC 2 = fixed cost for Proposed alternative alternative
Indifference point equation
Cpu1 * Q - FC1 = Cpu2 * Q - FC2

6. =
75 * Q - 360,000 = 175 * Q -945,000
=
945,000 - 360,000 = Q ( 175 - 75 )
=
100 * Q = 585,000
=
Q = 585,000/100
=
Q = 5850 Units
Therefore Indifference point is 5850 Units
Solution
Given
LOSS Sells a variety of equpiment including the executive office chair
Particulars
Current
No.of Units expected to sell the executive office chair
6000
Selling Price per executive office chair in $
250
Current manufacturing costs in $ per unit
175
Current Fixed cost
3,60,000
Proposed Changes
No.of Units expected to sell the executive office chair
6000
Selling Price per executive office chair in $
250
Alternative manufacturing costs in $ per unit
75
Alternative Fixed cost
9,45,000
Sl

7. Particulars
Current
Proposed
A
Sales
15,00,000
15,00,000
B
Variable cost
10,50,000
4,50,000
C
Contribution ( A - B )
4,50,000
10,50,000
D
Fixed cost
3,60,000
9,45,000
E
Profit ( C - D )
90,000
1,05,000
F
price Volume Ratio % ( C/A * 100 )
30%
70%
G
Break even Point Volume ( D/F)
12,00,000
13,50,000
H
Contribution Per Unit ( C/6000 )
75
175
I

8. Break even Point Units ( D/H)
4800
5400
J
Margin of safety sales ( A -G )
3,00,000
1,50,000
K
Margin of safety in Units ( J / selling Price pu )
1200
600
L
Margin of safety in Percentage ( J / A )*100
20%
10%
Indiffernce point between two alternatives
Indifference cost = point where there is no difference in cost between two alternatives
Indifference point Units
Assumptions
Q = Quantity / units
Cpu 1 = Contribution per unit for current alternative
Cpu 2= Contribution per unit for proposed alternative
FC 1 = fixed cost for current alternative
FC 2 = fixed cost for Proposed alternative alternative
Indifference point equation
Cpu1 * Q - FC1 = Cpu2 * Q - FC2
=
75 * Q - 360,000 = 175 * Q -945,000
=
945,000 - 360,000 = Q ( 175 - 75 )
=
100 * Q = 585,000
=
Q = 585,000/100
=
Q = 5850 Units

9. Therefore Indifference point is 5850 Units
Given
LOSS Sells a variety of equpiment including the executive office chair
Particulars
Current
No.of Units expected to sell the executive office chair
6000
Selling Price per executive office chair in $
250
Current manufacturing costs in $ per unit
175
Current Fixed cost
3,60,000
Proposed Changes
No.of Units expected to sell the executive office chair
6000
Selling Price per executive office chair in $
250
Alternative manufacturing costs in $ per unit
75
Alternative Fixed cost
9,45,000
Sl
Particulars
Current
Proposed
A
Sales
15,00,000
15,00,000
B
Variable cost
10,50,000
4,50,000
C
Contribution ( A - B )

10. 4,50,000
10,50,000
D
Fixed cost
3,60,000
9,45,000
E
Profit ( C - D )
90,000
1,05,000
F
price Volume Ratio % ( C/A * 100 )
30%
70%
G
Break even Point Volume ( D/F)
12,00,000
13,50,000
H
Contribution Per Unit ( C/6000 )
75
175
I
Break even Point Units ( D/H)
4800
5400
J
Margin of safety sales ( A -G )
3,00,000
1,50,000
K
Margin of safety in Units ( J / selling Price pu )
1200
600
L
Margin of safety in Percentage ( J / A )*100

11. 20%
10%
Indiffernce point between two alternatives
Indifference cost = point where there is no difference in cost between two alternatives
Indifference point Units
Assumptions
Q = Quantity / units
Cpu 1 = Contribution per unit for current alternative
Cpu 2= Contribution per unit for proposed alternative
FC 1 = fixed cost for current alternative
FC 2 = fixed cost for Proposed alternative alternative
Indifference point equation
Cpu1 * Q - FC1 = Cpu2 * Q - FC2
=
75 * Q - 360,000 = 175 * Q -945,000
=
945,000 - 360,000 = Q ( 175 - 75 )
=
100 * Q = 585,000
=
Q = 585,000/100
=
Q = 5850 Units
Therefore Indifference point is 5850 Units