Question

XYZ Ltd. manufactures a document reproducing machine which has a Variable Cost Structure
as follows:
Rs.
Material 40
Labour 10
Overhead 4
and a selling price of Rs. 90
Sales during the current year are expected to be Rs. 13,50,000 and Fixed Overhead Rs.
1,40,000.
Under a wage agreement, an increase of 10% is payable to all direct workers from the
beginning of the forthcoming year, while material costs are expected to increase by 7 ½%,
variable overhead costs by 5% and fixed overhead costs by 3%.
You are required to calculate:
(a) the new selling price if the current profit/volume ratio is to be maintained; and
(b) the quantity to be sold during the forthcoming year, to yield the same amount of profit
as the current year assuming the selling price to remain at Rs. 90.

Answer 1

ABC Ltd. has to make a choice between two machines X and Y .THe two machines are designed differently, but have identical capacity and do exactly the same job. Machine X costs Rs, 150000 and will last for 3 years. It costs Rs 40000 per year to run. Machine Y is an economy model costing only Rs 100000 but will last only for 2 years, and cost Rs 60000 per year to run. The cash flows of machine X and Y are real cash flows

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Answer 2

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ABC Ltd. has to make a choice between two machines X and Y .THe two machines are designed differently, but have identical capacity and do exactly the same job. Machine X costs Rs, 150000 and will last for 3 years. It costs Rs 40000 per year to run. Machine Y is an economy model costing only Rs 100000 but will last only for 2 years, and cost Rs 60000 per year to run. The cash flows of machine X and Y are real cash flow