Please help me on the following questions of costing:
Titan Engineering is operating at 70% capacity and presents the following information:
BEP =200 Cr., PV Ratio = 40% and Margin of Safety =50 Cr.
The Management has decided to increase production to 95% Capacity level with following changes –
a) Selling Price will be reduced by 8%
b) Variable cost will be reduced by 5% on sales
c) Fixed coat will increase by20 Cr., including depreciation on additions but excluding interest on additional capital
d) Additional capital of50 Cr. Will be needed for capital expenditure and working capital
Indicate the sales figure with workings that will be needed to earn10 Cr. Over and above the present profit and also meet the 20% interest on additional capital
What will be the revised (a) Break Even Point (b) PV Ratio and (c) margin of Safety?
CAclubindia
