Lesson 8. Marginal Casting 341 Sales value 8,58,000 8,58,000 Variable Cost: Direct Material 3.50 3.71 (3.50 x 106%) Direct Labour 1.25 1.35 (1.25 x 108%) Variable Cost Work overhead 3.125 (6.50 x 50%) 3.125 Sales Overhead 0.600 (0.80 x 25%) 0.600 Total Variable Cost per unit 8.075 8.385 Fixed Cost Work overhead 60,000 (6.250 - 3.125) 2,06,250 (1,87,500 - 1,87,500 110%) Sales Overhead 60,000 (0.80 x 75%) 39,600 (36,000 x 110%) - 36,000 Total Fixed Cost |28 2.23,500 2,45,850 Present selling Price 14.30 14.30 Contribution per unit 14.30-8.075 14.30-8.385 Contribution in 3,73,500 3,54,900 Profit ( Contribution-Foxed Cost) 1,50.000 1,09,050 Profit desired in current year 1,67,300 Increase in profit 58.250 Sales in No of units by increasing the Sales level by 20% 50.000 60% x 80% 220,000 Additional Variable Cost of 20,000 units $20,000 8.385 31, 67,700 Minimum sales price for 20,000 additional units (1, 67,700 +58,250720,000 211 297 The following data relate to a manufacturing company: Plant capacity: 4,00,000 units per annum Present utilisation: 40% Actuals for the year were: Selling price 250 per unit Materials cost 20 per unit Variable manufacturing costs 315 per unit Fixed costs +27 lakhs In order to improve capacity utilisation the following proposals are being considered: Reduce selling price by 10% Spend additionally 73 lakhs on sales promotion How many units should be made and sold in order to eam a profit of 85 lakhs per year