Suman Ltd manufactured and sold 1000 electric irons last year at a price of Rs 800 each. The cost structure of electric iron is as follows: Particulars Materials Labour Variable overheads Total marginal cost Factory overheads (fixed) Total Cost Profit Per unit (Rs) 200 100 50 350 200 550 250

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Chapter1: Financial Statements And Business Decisions
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Suman Ltd manufactured and sold 1000 electric irons last year at a price of Rs 800 each. The cost structure of electric iron is as
follows:
Particulars
Materials
Labour
Variable overheads
Total marginal cost
Factory overheads (fixed)
Total Cost
Profit
Sales
Per unit
(Rs)
200
100
50
350
200
550
250
800
Due to heavy competition, price has to be reduced to Rs 750 as suggested by the marketing manager. Is it a good idea?
Assuming no change in costs, calculate the number of electrical irons that would have to be sold at the new price t ensure the
same amount of profit as that of the last year.
Transcribed Image Text:Suman Ltd manufactured and sold 1000 electric irons last year at a price of Rs 800 each. The cost structure of electric iron is as follows: Particulars Materials Labour Variable overheads Total marginal cost Factory overheads (fixed) Total Cost Profit Sales Per unit (Rs) 200 100 50 350 200 550 250 800 Due to heavy competition, price has to be reduced to Rs 750 as suggested by the marketing manager. Is it a good idea? Assuming no change in costs, calculate the number of electrical irons that would have to be sold at the new price t ensure the same amount of profit as that of the last year.
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