Management accounting
Variable cost per unit is given as 12
Sales in units is given as 50,000 units
Return on capital employed is 20%
Capital employed is 12 lakh on fixed assets and 50% on sales value.Fixed cost is given as Rs.5,10,000
Has been asked to determine the selling price per unit for a desired profit of 20% on capital employed?
Would i have the solution please?
let the sales price be x
Capital employed = 12,00,000 + 50 % of (50,000*x)
profit = 2,40,000 + 5,000 x
the price of one unit = (variable cost + fixed cost + profit)/50,000
price per unit = [6,00,000+12,00,000+2,40,000+ 5,000x]/50,000
=[20,40,000 + 5,000 x]/50,000
x = 40.80 + .1 x
.9 x =40.8
x = 45.33
The Sales value will be
50,000 units * 45.33 = 22,66,500
= 12,00,000+ 11,33,250
=23,33,250
= 20 % of 23,33,250
i.e. 4,66,650
profit = sales value -variable cost - fixed cost
=22,66,500- (12* 50,000) - 12,00,000
= 4,66,500
hence checked any doubt plzz aSK
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