Question

b) The Hyderabad Lid. has the following total operating results for the current year:
Sales revenue
Less: variable costs
56.60.000
37,20,000
18,80,000
10.00,000
Contribution
Less fixed costs
Net Income
8,80,000
The following additional information concerning the performance of the firm's 3
operating divisions has been provided.
Sales revenue
Variable costs
Direct fixed costs
A
Rs.
24.00.000
16,80,000
3,20,000
B
Rs.
20,00,000
12.00,000
2,80,000
C с
Rs.
12,00,000
8,40,000
2,00,000
You are required to rank the 3 divisions on the basis of their proportionate measure
of relative profitability. A proposal to increase advertising expenses by
Rs.1,23.200 is expected to generate a 10% increase in sales in all the 3 divisions.
Analyse the effect of this proposal on the firm as a whole and on each division's
Assume that the cost of advertising will be allocated to each division's percentage
to sales, and is to be considered as an attributable fixed cost of each department.​

Answer 1

Answer:

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