b) PST Limited is a cement block production company. It has developed a new cement block having higher strength, better appearance, and less self-weight. PST Limited requires a return on invested capital of 25% per annum. Budgeted sales volume (in units) -100,000 units. Variable production cost per unit - Rs. 65 Fixed production cost per unit -Rs. 55 Other annual fixed costs (overheads etc.) - Rs. 2,500,000 Investment in machinery to produce the new block - Rs. 1,200,000 Period over which investment in new machinery is to be written off - 05 years. Research and development costs for the new block - Rs. 800,000 i) Calculate the unit price of the new cement block based on the above data. (05 marks)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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b) PST Limited is a cement block production company. It has developed a new cement
block having higher strength, better appearance, and less self-weight. PST Limited
requires a return on invested capital of 25% per annum.
Budgeted sales volume (in units) -100,000 units.
Variable production cost per unit - Rs. 65
Fixed production cost per unit -Rs. 55
Other annual fixed costs (overheads etc.) - Rs. 2,500,000
Investment in machinery to produce the new block - Rs. 1,200,000
Period over which investment in new machinery is to be written off - 05 years.
Research and development costs for the new block - Rs. 800,000
i) Calculate the unit price of the new cement block based on the above data.
(05 marks)
Transcribed Image Text:b) PST Limited is a cement block production company. It has developed a new cement block having higher strength, better appearance, and less self-weight. PST Limited requires a return on invested capital of 25% per annum. Budgeted sales volume (in units) -100,000 units. Variable production cost per unit - Rs. 65 Fixed production cost per unit -Rs. 55 Other annual fixed costs (overheads etc.) - Rs. 2,500,000 Investment in machinery to produce the new block - Rs. 1,200,000 Period over which investment in new machinery is to be written off - 05 years. Research and development costs for the new block - Rs. 800,000 i) Calculate the unit price of the new cement block based on the above data. (05 marks)
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