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Below data pertains to Rocky Ltd. which manufacturers motors and pumps. Company has three products, and the cost data are given below Pumps Motors Flow
Below data pertains to Rocky Ltd. which manufacturers motors and pumps. Company has three products, and the cost data are given below
| Pumps | Motors | Flow Controllers |
Unit Sales | 100000 | 75000 | 10000 |
Unit Selling Price | 700 | 800 | 1800 |
Variable Manuf. Cost | 350 | 400 | 800 |
Variable Selling Cost | 50 | 75 | 100 |
Rockey Ltd. Fixed costs are equal to 44,400,000. Rockey ltd is subject to ta tax rate of 30%.
- What is the BEP for each product assuming the sales mix remains the same
- In the coming period company expects the variable manufacturing cost of the flow controllers to increase by 20%. What will be the new BEP if the sales mix remains the same
- The company expects a higher demand for Flow controllers. They expect the demand to double from the current 10,000 units in the next five years. Company is thinking of automating the plant which will reduce the variable cost by Rs. 50 and will also lead to a increase in the fixed cost by 5 million. Should the company automate their plant?? What are the other alternatives that you propose for the company?
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