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Particulars All combined Year 1 Year 2 B All combined B 10.000 15.000 5.000 30.000 10.000 15.000 5.000 10 512 20 *12.666 10 12 20
Particulars All combined Year 1 Year 2 B All combined B 10.000 15.000 5.000 30.000 10.000 15.000 5.000 10 512 20 *12.666 10 12 20 1,00,000 1,80,000 1,00,000 3,80,000 1,00,000 1,80,000 1,00,000 30.000 *12.666 3.80.000 Units produced and sold Selling price per unit Sales revenue Less: Variable costs (see working notes) Contribution Less: Fixed costs Operating profit PN ratio %) BEP Margin of safety 35.000 75.000 55.000 1.65,000 65.000 1,05,000 45,000 2,15,000 40.000 45,000 25,000 1.10,000 25,000 60,000 20.000 1.05.000 65 58.33 45 56.58 1,94,419 1,85,581 38.500 61,500 40,000 21.500 61.5 82.500 60.500 97,500 39.500 45,000 25.000 52.500 14.500 54.17 39.5 1,81,500 1.98,500 1,10,000 88.500 52.24 2. 10.500 1,69,420 j46 B 212 210 3.5 6.5 5.0 7.0 20 11 9.0 A 1,00,000 - 40,000 FC + 325,000 profit (0.25 x 21,00,000) + VC, that is, 335.000. B 11,80,000 = 45,000 FC + 260,000 profit (0.3333 x +1,80,000) + VC, that is, 75,000. C 21,00,000 - 25,000 FC + 20,000 profit (0.20 x 1,00,000) + VC, that is, 355,000. (11) Product C should be produced to utilise the SP are capacity of 20 per cent as its marginal con- tribution per unit is maximum as shown below: Particulars Sales price Less: Variable cost per unit P.16.15 Hansa Ltd manufacturing a single product is facing severe competition in selling it at 150 per unit. The company is operating at 60 per cent level of activity at which level sales are 312,00,000; vari- able costs are $30 per unit; semi-variable costs may be considerd fixed at 390,000 when output is nil and the variable element is $250 for each additional 1 per cent level of activity: fixed costs are $1,50,000 at the present level of activity, but if a level of activity of 80 per cent or above is reached, these costs are expected to increase by 550,000 To cope with the competition, the management of the company is considering a proposal to reduce the selling price by 5 per cent. You are required to prepare a statement showing the operating profit at levels of activity of 60 per cent, 70 per cent and 82 per cent, assuming that: 1. The selling price remains at 350; and 2. The selling price is reduced by 5 per cent. Show also the number of units, which will be required to be sold to maintain the present profits if the company decides to reduce the selling price of the product 5 by per cent
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