Computation of selling price Particulars Variable cost (10,000 x 8) Fixed cost Total cost (+) Profit / (loss) Sales Selling price = 1,00,000 / 10,000 = 10/- 80,000 30.000 1.10,000 (10,000) 1,00,000 p27 SM Statement showing computation of additional units required to attain the target of respective managers Sl. No. Particulars FM PM Selling price 10.00 10.00 9.70 II Variable cost 8.50 8.00 8.00 III Contribution 1.50 2.00 1.70 IV Fixed cost 30,000 35,000 30.000 V Target BE sales Profit of 5,000 Profit of 4.000 VI No. of units (30,000/1.5) = 20,000 (35,000+5,000)/2 = 20,000 (30,000+4,000)/1.70 = 20,000 VII Additional Units 10,000 10,000 10,000 Problem 37 A limited company manufactures three different products and the following information has been collected from the books of accounts. PRODUCTS S T Y Sales Mix 35% 35% 30% Selling price (R) 30 40% 20 Variable Cost (2) 15 20% 12 Total fixed cost () 1,80,000 Total Sales (2) 6,00,000 The company has currently under discussion, a proposal to discontinue the manufacture of product Y and replace it with product M, when the following results are anticipated. PRODUCTS S T M Sales Mix 50% 25% 25% Selling price ) 30 40% 30 Variable Cost (2) 15 20% 15 Total fixed cost (3) 1,80,000 Total Sales () 6,40,000 Will you advise the company to changeover to production of M2 Give reasons for your