The following are the operating details of two plants operating under the same management:
|
Plant A (Rs) |
Plant B (Rs) |
|
|
Sales |
12,00,000 |
10,00,000 |
|
Variable costs |
6,00,000 |
5,00,000 |
|
Fixed costs |
2,00,000 |
1,00,000 |
|
Capacity of operation |
100% |
50% |
It is proposed to merge both the plants. You are required to ascertain
- Break even sales and break even capacity of the merged plant
- Profit and profitability of operating the merged plant at 90% of the capacity
- Capacity level of operation if a profit of Rs 4,00,000 (the profit made by both the plants before merger) has to be attained by the merged plant