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Learning Objectives: The students are expected to learn and apply the cost-volume-profit analysis.

Scenario:

Alvence and Tonee (Pvt.) Limited launched its exclusive designers accessories in ladies and gents shoes few years back in Lahore with the aim to let them handle their necessities with comfort. Now, its brands are famous for stylish and affordable shoes.  

At the start of new financial year, the sales manager of the Alvence and Tonee limited has to plan about future sales of its shoes section, consisting of two product lines - leather gents and ladies shoes. To plan about future sales, the sales manager is in need of data about per unit cost and profit for each product line from the company’s accountant.

Accountant demonstrates the per unit data that shows currently the company is selling leather shoes at Rs.300 per unit and ladies shoes at Rs 190 per unit respectively. Other cost data is as follows:

 

Details

Leather Shoes

Rs. P/U

Ladies Shoes

Rs. P/U

Variable Cost

130

110

Fixed Cost

144

52

Profit

26

28

 

Considering the above mentioned information, answer the following:

a)   Determine per unit contribution margin, contribution margin ratio for each of the product.

b)   If the sales manager decides to increase production substantially any of the above two products, determine which product will be more profitable for the company.

c)    Support your answer in part (b) based on logical reason

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Replies to This Discussion

lets start the disccusion

mjy per unit ki ni smaj a rhi ye kistra nikalna hai 

any cna help me 

Contribution Margin par unit can be find by Deducting variable cost from sales

To calculate the contribution margin ratio, divide the contribution margin by sales. The contribution margin is calculated by subtracting all variable costs from sales. The formula is:

Sales - Variable expenses / Sales

mehak what about part b and c ?

part b kis base pe hoga ? discuss please

Plz part b ka koi hint de dey

Iss ka solution bhi post kary jis na kar lia ha.

Please some one send the solution please

Because in the evening the server gets too busy.
so hurry up

 koi to solution kr day post 

plz snd the solution plzzzzzzzzzzzzz

Guys plz share some ideas to solve the GDB. Time is almost over.

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