Further the whole consignment would require packaging and forwarding expenses

Further the whole consignment would require packaging

This preview shows page 188 - 191 out of 203 pages.

Further the whole consignment would require packaging and forwarding expenses of Rs. 300000/- on lump sum basis. The company wishes to earn a profit of Rs. 500000/- from this business Calculate the price that the company should quote. 19.Sharp Razors Ltd. follows a pricing policy of earning 20 percent return on invested capital. It incurs the following costs for a particular product: Table no: 26 Units sold (Nos) 10400 3400 4000 3000 Since the problem states that all are marketing costs we shall be taking marketing, selling, distribution and administrative costs as marketing costs for the purpose of our calculation. Total costs 166073 220293 157553 Marketing cost per unit sold 48.85 55.07 52.52 Marketing cost as percentage of sales turn over 28.6 percent 27.5 percent 25.4 percent Variable cost/unit Rs. 90 Fixed overheads/year Rs. 1500000 Depreciation and other Fixed expenses/ year Rs. 1500000 Invested capital Rs. 10000000 188
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PROBLEMS FOR EXERCISE The company expects to produce and sell 20,00,000 units. Calculate the target selling price. 20. A. Delhi Mixy Co. manufactured and sold 1000 units at a price of Rs. 800 each. The cost structure of a mixy is as follows: Due to heavy competition, price has to be reduced to Rs. 750 for the coming year, assuming no change in costs, state the number of mixies that would have to be sold at the new price to ensure the same amount of total profits as that of the last year. Show your answer with verification. B. In a purely competitive market 10000 pocket cell phones can be manufactured and sold and a certain profit is generated. It is estimated that 2000 pocket cell phones need to be manufactured and sold in a monopoly market to earn the same profit. Profit under both the conditions is targeted at Rs. 200000. The variable cost per pocket cell phone is Rs. 100 and the total fixed cost is Rs. 27000 Rs. Materials 200 Labour 100 Variable cost 100 450 Factory Overhead (fixed) 200 Total cost 650 Profit 250 Sales Price 900 189
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PROBLEMS FOR EXERCISE You are required to find out the unit selling price both under monopoly and competitive conditions. 21.The profit of GKW Ltd for the year 2002 has been worked out at 12.5 percent on the capital employed and relevant figures are as under: Table no: 27 The new sales manager who has joined the company recently has estimated a Profit of about 23 percent on the capital employed for the next year, provided the volume of sales increased by 10percent, the selling price increases by 4percent, and there is an overall cost reduction for all the cost elements by 2 percent. You are required to find out (by giving details of computation) the cost profit figures for the next year and make comments on the estimate of sales manager, viz will it be possible? 22.Ponds Ltd. has a present Annual sales level of 10000 units at Rs. 300 per unit . The variable cost is Rs. 200 per unit and fixed cost amounts to Rs. 300000 per annum. The present credit period allowed by the company is 1 month. The company is considering a proposal to increase the credit period to 2 months and 3 months and has made the following estimates: Table no: 28 Rs.
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