A, B and C are three similar plants under the same management who want them to be merged for better operation. The details are as under : Plant А B Capacity operated 100% 70% 50% ($) ($) ($) (in lakhs) (in lakhs) (in lakhs) Turnover (Sales) 300 280 150 Variable cost 200 210 75 Fixed cost 70 50 62 Find out : (i) the capacity of the merged plant for break even; (ii) the profit at 75% capacity of the merged plant; (iii) the turnover from the merged plant to give a profit of $ 28 lakhs. (iv) when the merged plant is working at a capacity to earn a profit of $28 lakhs what percentage increase in selling price is required to sustain an increase of 10% in fixed overheads.

A, B and C are three similar plants under the same management who want them to be merged for better operation. The details are as under : Plant А B Capacity operated 100% 70% 50% ($) ($) ($) (in lakhs) (in lakhs) (in lakhs) Turnover (Sales) 300 280 150 Variable cost 200 210 75 Fixed cost 70 50 62 Find out : (i) the capacity of the merged plant for break even; (ii) the profit at 75% capacity of the merged plant; (iii) the turnover from the merged plant to give a profit of $ 28 lakhs. (iv) when the merged plant is working at a capacity to earn a profit of $28 lakhs what percentage increase in selling price is required to sustain an increase of 10% in fixed overheads.

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter14: Decentralized Operations

Section: Chapter Questions

Problem 14.18E

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