1. Break even in Tons
Fixed cost/ Contribution per unit
Fixed Cost = 247500
Contribution per unit = Contribution/Units
=405000/1800
=225
=247500/225
=1100 Tons
2.Net Income at 2100 Tons = 405000/1800*2100 = 4,72,500 (Because Nothing will change as given in the question )
Less: Fixed Cost =- 2,47,500
Net Income = 2,25,000
3. IF accepts the offer
Total Sales capacity | 3000 |
Present | -1800 |
Order | -1500 |
Shortage of order | -300 |
Case 1 | |
If adjusted in present order | 1500 |
opportunity lost | 300 |
variable cost | 275 |
Contribution | |
At first 1500 tons @225 per ton | 337500 |
next 1500 units @175 per ton | 262500 |
opportunity lost for 300 tons (225 per ton) | -67500 |
Total Contribution | 532500 |
Less Fixed cost | -247500 |
Net Income | 285000 |
4.
Saling price | 500 |
Variable cost | |
Current level | 275 |
Incremental selling cost per ton | 25 |
Contribution | 200 |
Tons | X Tons |
Fixed cost | |
Current level | 247500 |
Incremental advertising cost | 61500 |
Total Fixed cost | 309000 |
Net Income | 157500 |
Sale Volume in Tons | |
200X | 466500 |
X | 2332.5 |
5.
Fixed cost | 247500 |
Increase in fixed cost | 58500 |
Total Fixed cost | 306000 |
Sale value | 500 |
Variable cost | 275 |
Increase in variable cost | 25 |
Total variable cost | 300 |
Contribution | 200 |
Break even in tons | 1530 |
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