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Global Company manufactures and sells two products, product A and product B. The total monthly fixed expenses of the company are Rs.480,000. Sales price per unit of product A and product B is Rs.100 and Rs.200 and variable cost per unit is Rs.50 and Rs.80 respectively. Global’s management has set the goal to achieve the sales revenue of Rs.2,600,000 in the following month. To achieve this target, following alternatives are available to the company:
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cm ratio a awr b main 0.5 and .6 ati hai dono apotion main same hogi correct me please if I am wrong
and please check the target profit calculation also
|Product A CM Ratio||0.50||0.6|
|Sale To Earn Target Profit||5,680,000.00||4,813,333.33|
Its wrong dear.
Fixed cost / by CS Ratio= 480000/.50 = 960,000
Target Profit ka Formula Kia hai
Syed sajjad how you calculate CS Ratio 0.5 please tell the procedure?
Ans: case (i) is better than case (ii) as it has high profit.
(i) 1,000,000 rupees
(ii) 920,000 rupees
As products of variable cost in both cases are different, so contribution margin also changes.
how to calculate
to find profit, see page-185 Q.2.
then by the help of these data
find break even sale is rupees formula on page 185.
may be u can get the answer.
hope u understand
Q.3 how to calculate net operating income