Model: 12 Fixation of selling price
A single product company sells its products at Rs. 50 per unit. In 2008, the company operated at a margin of safety of 60%. The fixed costs amounted to Rs. 4,00,000 and the variable cost ratio to sales was 60%. In 2009, it is estimated that the variable cost will go up by 10% and the fixed costs will increase by 5%. You are required to
- Compute the selling price to be fixed in 2009 to earn the same P/ V ratio as in 2008.
- Calculate the number of units to be produced and sold to earn the same profit as in 2008, assuming the same selling price of Rs. 50 per unit.