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Consider the following information related to a manufacturing company. Rs. (per unit) Selling Price 100.00 Variable costs Direct Material 30.00 Direct Labour 30.00 Variable overhead
Consider the following information related to a manufacturing company. Rs. (per unit) Selling Price 100.00 Variable costs Direct Material 30.00 Direct Labour 30.00 Variable overhead 20.00 Fixed costs are estimated at Rs.100,000/- for the year and the company expects to sell 10,000 units during the year. You are required to calculate (a) Contribution Sales (C/S) Ratio. (b) Sales at the break-even point, (03 marks) If the fixed costs increase by Rs.10,000/- and sales and variable cost remain unchanged. compute the new breakeven point (02 marks) (iv) The company is considering a proposal to modernize its existing plant. This will need additional fixed cost of Rs.25000/- with the expectation of saving Rs.2.50 each from direct material costs and direct labour costs need to produce a unit. If this proposal is undertaken, compute (a) Contribution Sales Ratio (b) Break-even point (c) Profit of the company after modernizing (05 marks)
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