15. ABC Ltd., manufactures fans, which are sold at 400 per fan. The cost of sale is com posed of 40% of direct material, 30% of wages and 30% of overhead.

An increase in material price by 25% and in wage rate by 10% is expected in the forthcoming year, as a result of which the profit at current selling price may dwindle by 39% of present gross profit.

With the above information, Required to

(a) make a statement showing current and future costs and profit at present selling price, and

(b) determine the future selling price, if the present rate of gross profit is to be maintained. (2 + 4 + 1 = 7)