Question

A review by the top management of ABC Ltd, which makes
only one product, of the results of the first quarter of the year
revealed the following:
Sale in units
10.000
Loss
Rs 10,000
Fixed cost (for the year Rs 1.20,000) Rs 30,000
Variable cost per unit
Rs 8.00
The finance manager, who feels perturbed, suggests that the
company should at least breakeven in the second quarter with a
drive for increased sales. Towards this, the company should
introduce a better packing, which will increase the cost by 50
paise per unit
The sales manager has an alternative proposal. For the sec
ond quarter, additional sales promotion expenses can be in-
creased to the extent of Rs 5,000 and a profit of Rs 5.000 can
be aimed at during the period with increased sales.
The production manager feels otherwise. To improve the
demand, the selling price per unit has to be reduced by 3%. As
a result, the sales volume can be increased to attain a profit
level of Rs 4,000 for the quarter
The managing director asks you, as a Cost Accountant to
evaluate the duree proposals and calculate the additional sales
volume that would be required in cach case, in order to help him
take the decision
Taken from Intermediate Examination of the Institute of Cost
and Works Accountants Examination paper on Cost Account-
ing held in December 2000
O
H​

Answer 1

Answer:

bro type short questions not so long