The company Cooling Limited manufactured and sold 1,000 refrigerators in the year ending on 31 December 1997. The summarized trading, profit and loss account is as follows:

For the year ending on 31 December 1998, it was estimated that

(a) Output and sales would be 1,200 refrigerators.

(b) Prices of materials would go up by 20% on the level of the previous year.

(c) Wages would increase by 5%.

(d) Manufacturing cost would rise in proportion to the combined cost of materials and wages.

(e) Selling costs per unit would remain unchanged.

(f) Other expenses would also remain constant.
You are required to submit a statement to the board of directors showing the price at which the refrigerators should be sold so as to show a profit of 10% on selling price.

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Particulars Rs Particulars Rs To cost of materials 80,000 By sales 4,00,000 To direct wages 1,20,000 To other manufacturing costs 50,000 To gross profit (c/d) 1,50,000 4,00,000 4,00,000 To management salaries 60,000 By gross profit (b/d) 1,50,000 To rent, rates 10,000 To selling expenses 30,000 To general expenses 20,000 To net profit 30,000 1,50,000 1,50,000