177 PROBLEMS FOR EXERCISE 7 A Company manufactures and sells pens The current

177 problems for exercise 7 a company manufactures

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177
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PROBLEMS FOR EXERCISE 7. A Company manufactures and sells pens. The current volume of sales is 50 lacs units and selling price is Rs. 25 per unit. The fixed costs are Rs. 450 lacs. The variable cost per unit is Rs. 15. I. Compute income for 20 percent decrease in fixed costs, 20 percent decrease in selling price, 10 percent decrease in variable cost per unit and 40 percent increase in units sold. II. Find breakeven point for 10 percent increase in selling price and ` 1 lacs increase in fixed costs. 8. A company manufactures 3 products A,B,C with contribution margin of Rs. 150, Rs. 100, and Rs. 50 respectively. The sales forecasted are 20000 units of A, 100000 units of B and 80000 units of C. The fixed costs are Rs. 127.5 lacs. Find the breakeven quantity. Find operating income if 20000 units of A, 80000 units of B and 100000 units of C are sold. Find the new breakeven quantity for this product mix. Solution: In this case one can see that the 3 products A B and C are sold in a ratio of 2:10:8. Hence the weighted contribution would be (2 x 150 + 10 x 100 + 8 x 50) ÷ ( 2 + 10 + 8) = 85. The break even volume would be 12750000 ÷ 85 of this composite mix of A B and C, which will be 150000. The composition being 2 : 10 : 8 of A B and C the actual quantities would be A 15000, B 75000, and C 60000. The rest of the problem you can use the above method to solve. 9. The Branch office of the marketing Department of an organization has provided following details: 178
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PROBLEMS FOR EXERCISE Table no: 18 Note: Unless stated otherwise, the figures above are in Rupees lacs. Who is the best Sales person and why? Justify explaining the basis used. (Base answer on the details given) 10.Since the introduction of Television in 1970, Powerful Televisions Pvt. Ltd (PTPL) enjoyed reputation as a leading brand in Black and White Television (BTVs) Later on PTPL also introduced colour television (CTV) and achieved 15 percent market share. However following the entry of global MNC’s and their brands, which become popular due to exchange offers etc, PTPL’s market share fell to 8 percent. Company found it difficult to hold dealer loyalty even though 90 days credit was extended to them. The Managing Director of PTPL, Gaurav Saxena (GS) was concerned about the falling market share. He believed that a price of less than 10000 per set set of CTV, as compared to the present price of 14000 would bring in a lot of customers to the company. Sales Staff concerned Particulars Abhijit Rohit Vaibhav Sales 80 120 180 Potential of area 100 200 320 Selling expenses 4 9.6 18 percentge of complaints attended 90 percent 70 percent 50 percent Accounts Lost 3 6 9 No. of calls/ day 2 4 6 New accounts created (Nos) 3 6 9 Average Working Capital blocked 16 15 16 179
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PROBLEMS FOR EXERCISE Moreover his market research agency had indicated that the TV replacement market comprised 50 percent of the total market of CTVs which had two main segments: I. Upgraders from BTV to CTV.
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