cost accounting
This query is : Open
dileepkumar
(Querist)
22 June 2017
ABC Company has a present level of sales of Rs. 50,00,000. The firm plans to change its credit period and estimates that the change will result
in increased sales of Rs. 5,00,000. Given this information, how much will be the potential addition to profits on account of the enhanced sales
assuming the ratio of variable cost to sales to be 0.85
in increased sales of Rs. 5,00,000. Given this information, how much will be the potential addition to profits on account of the enhanced sales
assuming the ratio of variable cost to sales to be 0.85
CA Rashmi Gandhi
(Expert)
22 June 2017
Profit will increase by Rs.75000/--
dileepkumar
(Querist)
22 June 2017
piz reply with solution
CA Rashmi Gandhi
(Expert)
22 June 2017
Increase in sales is 500000. variable cost is 425000(500000*0.85). Cont will be 75000.
So increase in profit is 75000 as no change is there in fixed cost.
So increase in profit is 75000 as no change is there in fixed cost.
dileepkumar
(Querist)
22 June 2017
thank you mam
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CA Rashmi Gandhi
(Expert)
22 June 2017
Welcome. Pleasure is mine
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