Paty Ltd operating business of containers and it is contemplating two cost structures for its operations. It has high variable cost pu containers with lower annual fixed costs It has lower variable cost with higher fixed cost. Plan A: Per container revenue=100 Variable cost per container delivered=85 Cost=1,200,000 Plan B: Per container revenue=100 Variable cost per container delivered=60 Cost=4,500,000 Required: 1.BEP (In volumes) for both the plans 2.Under plan A to produce an operating income of 30,000? 3.Containers to be made under plan A to produce an operating margin which is equal to 9% of sales revenue in total.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Paty Ltd operating business of containers and it is contemplating two cost structures for its operations.

  1. It has high variable cost pu containers with lower annual fixed costs
  2. It has lower variable cost with higher fixed cost.

Plan A:

Per container revenue=100

Variable cost per container delivered=85

Cost=1,200,000

Plan B:

Per container revenue=100

Variable cost per container delivered=60

Cost=4,500,000

Required:

1.BEP (In volumes) for both the plans

2.Under plan A to produce an operating income of 30,000?

3.Containers to be made under plan A to produce an operating margin which is equal to 9% of sales revenue in total.

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