1. Gul Ahmad limited is associated with the clothing business and being a new start up, the management is about to choose the right pricing strategy. If the marginal cost of product Delta is PKR XX/unit. Then find Selling price for each in the following circumstances: a) To earn a return on costs of XX% (mark up) b) To earn a return on sales of 133% (margin)

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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1. Gul Ahmad limited is associated with the clothing business and being a new start up, the
management is about to choose the right pricing strategy. If the marginal cost of product Delta
is PKR XX/unit. Then find Selling price for each in the following circumstances:
a) To earn a return on costs of XX% (mark up)
b) To earn a return on sales of 133% (margin)
2. Suppose company uses marginal cost plus pricing for its products, Y. If the company's
cost structure and output structure consist of 4000 Output (units), total cost of 250,000 and
fixed costs of PKR 150,000, then calculate the following:
a) What is the breakeven point in units?
b) What is the breakeven revenue?
3. A company has different output levels, and incurs different total production costs at
each level, as follows.
Output
(units)
6,000
8,000
Total Costs
44,700
57,700
c) If the selling price is SXX/unit at all levels, what is the B.E.P.?
d) What is the breakeven revenue?
Transcribed Image Text:1. Gul Ahmad limited is associated with the clothing business and being a new start up, the management is about to choose the right pricing strategy. If the marginal cost of product Delta is PKR XX/unit. Then find Selling price for each in the following circumstances: a) To earn a return on costs of XX% (mark up) b) To earn a return on sales of 133% (margin) 2. Suppose company uses marginal cost plus pricing for its products, Y. If the company's cost structure and output structure consist of 4000 Output (units), total cost of 250,000 and fixed costs of PKR 150,000, then calculate the following: a) What is the breakeven point in units? b) What is the breakeven revenue? 3. A company has different output levels, and incurs different total production costs at each level, as follows. Output (units) 6,000 8,000 Total Costs 44,700 57,700 c) If the selling price is SXX/unit at all levels, what is the B.E.P.? d) What is the breakeven revenue?
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