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A company presently sells an equipment for 35000. Increase in prices of labour and material cost are anticipated to the extent of 15% and 10%
A company presently sells an equipment for 35000. Increase in prices of labour and material cost are anticipated to the extent of 15% and 10% respectively in the coming year. Material cost represents 40% of cost of sales and labour cost 30% of cost of sales. The remaining relates to overheads. If the existing selling price is retained, despite the increase in labour and material prices, the company would face a 20% decrease in the existing amount of profit on the equipment. You are required to arrive at a selling price so as to give the same percentage of profit on increased cost of sales, as before. Prepare a statement of profit/loss per unit, showing the new selling price and cost for unit in support of your
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