Accounting

Others 1467 views 3 replies

 

Dear Sir,

 

   Kindly give the answer of this questin.

From the books of Aggarwal Bors, the following information have been extracted:
Rs.
Sales
2,40,000
Variable costs
1,44,000
Fixed costs
26,000
Profit before tax
70,000
Rate of tax
40%
The firm is proposing to buy a new plant which can generate additional annual profit of Rs. 10,000. The fixed costs of new plant is expected to Rs. 4000. The new plant will increase the sales volume by Rs. 40,000. It can be assumed that the ratio between sales and variable costs remains the same. Calculate.
(i) New BEP
(ii) Sales to earn present level of profit
(iii) Sales to earn expected profit on proposed investment
(iv) Maximum profit potential after tax and plant expansion

Replies (3)

Also Available on my blog

https://dynamictutorial.blogspot.in/p/ignou-nios.html

Particulars Present Level Proposed Level Sales Less: Variable Cost 240000 144000 280000 (240000+40000) 168000 (144/240*280000) Contribution Less: Fixed Cost 96000 26000 112000 30000 (26000 + 4000) Net Profit Before Tax Less: Tax @ 40% 70000 28000 82000 32800 Net Profit After Tax 42000 49200 (i) New Break Even Point = (Fixed Costs/Contribution)* Saless = (30000/112000) * 280000 = 75000 (ii) Sales to earn Present Level of Profit i.e. 70000 Sales = (Fixed Cost + Profit)/ P/V ratio = (30000 + 70000) / 40% = 100000 / 40% = 250000 Here, P/V Ratio = (Contribution / Sales) * 100 = (112000/280000) * 100 = 40% (iii) Sales to earn Expected Profit i.e. 80000 (70000 + 10000) on Proposed Investment Sales = (Fixed Cost + Profit)/ P/V ratio = (30000 + 80000) / 40% = 110000 / 40% = 275000 (iv) Maximum Profit Potential after tax and Plant Expansion Particulars Proposed Level Sales Less: Variable Cost 280000 (240000+40000) 168000 (144/240*280000) Contribution Less: Fixed Cost 112000 30000 (26000 + 4000) Net Profit Before Tax Less: Tax @ 40% 82000 32800 Maximum Profit Potential 49200

I can deliver leased instruments to Organization or individuals, Trading, Discounting, signature project(s) such as Aviation, Agriculture, Petroleum, Telecommunication, construction of Dams, Bridges, Real Estate and all kind of projects with their preferred text verbiage as been approved by their bankers. We also proffer-sales option to interested buyers. Our terms and procedures are so flexible and workable by RWA clients. Our lease rate is (5.0 + 1)%+x%. X% IS Lessee broker's Commission and he determines his commission. Also we have facilities to discount BG and Put you into PPP Trading. If Interested kindly contact me via Email: (bginstrumentmandate @ gmail.com) Skype: (zsebe.jozsef1) Thank you. Zsebe Jozsef
Greetings to you potential client,We Have Effective and efficient Financial PROVIDER who offer financial instruments such as Fresh Cut Bank Guarantee (BG), Standby Letter of Credit (SBLC), Medium Term Note (MTN) and Cash loan, which we have specifically for "lease/buy". These Instruments from our investor can be professionally arranged in your name from major banks and institutions. Some of the available banks we have includes : HSBC Bank, Barclays Bank or Deutsche Bank Frankfurt. Our financial instrument can be invested into High Yield Investment Trading Program {HYITP) or Private Placement Program (PPP). All bank instruments are for lease and/or sale from a genuine and reliable source without broker chain / joker broker story or chauffer driven offer while having your required time frame in mind. Just in case you do not know,Please note that Most banks offer SBLC/BG in US Dollars or Euros! Please take note that we strongly support the usage of our leased facilities into LARGE initiating and funding project(s) such as Aviation Agriculture Petroleum Mining Telecommunication Construction Project,and other great investment fortune etc.if you are serious about this you can contact us VIA EMAIL:MARKGROUPLTD @ GMAIL.COM SKYPE ID:MARK.CAPITAL1


CCI Pro

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register