Lotus. Ltd. sells a product Beta whose selling price is Rs 40 per unit and the variable cost is Rs 16 per unit. Beta is produced with the help of Plastic (i) If the Fixed Costs for this year are Rs 4,80,000 and the annual sales are at 60% marginof safety, calculate the rate of net return on sales, assuming an income tax level of 40% (ii) For the next year, it is proposed to add another product line Alpha( produced with clay) whose selling price would be Rs 50 per unit and the variable cost Rs10 per unit. The total fixed costs are estimated at 'Rs 6,66,600. The sales mix of Beta: Alpha would be 7:3. At what level of sales next year, would Lotus Ltd. break even? Give separately for both Alpha and Beta the break even sales in rupee and quantities. (iii) Suppose if you need to choose between Alpha and Beta which product will you choose and Why (iv) What according to you the appropriate Ratio of Bet and Alpha? How CVP Analysis can be used in Decision Making?
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Lotus. Ltd. sells a product Beta whose selling price is Rs 40 per unit and the variable cost is Rs 16 per unit. Beta is produced with the help of Plastic (i) If the Fixed Costs for this year are Rs 4,80,000 and the annual sales are at 60% marginof safety, calculate the rate of net return on sales, assuming an income tax level of 40% (ii) For the next year, it is proposed to add another product line Alpha( produced with clay) whose selling price would be Rs 50 per unit and the variable cost Rs10 per unit. The total fixed costs are estimated at 'Rs 6,66,600. The sales mix of Beta: Alpha would be 7:3. At what level of sales next year, would Lotus Ltd. break even? Give separately for both Alpha and Beta the break even sales in rupee and quantities. (iii) Suppose if you need to choose between Alpha and Beta which product will you choose and Why (iv) What according to you the appropriate Ratio of Bet and Alpha? How CVP Analysis can be used in Decision Making?
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