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Needed a Document for Shivansh ltd. Engaged in manufacturing of steel chair is working at 40% capacity and produces 1,00,000 chairs per month.Materials Rs. 10Labour Rs. 5Overheads Rs. 5 (60% fixed)The selling price is Rs. 25 per chair. If it is desired to work the factory at 50% capacity the selling price falls by 4% at 90% capacity the selling prices falls by6% accompanied by a similar fall in the price of material You are required to prepare a Statement of profit at 50% and 90% capacities and also calculate the break-even-point at this capacity production.?
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Needed a Document for Shivansh ltd. Engaged in manufacturing of steel...
Statement of Profit at 50% Capacity

- Production: 1,25,000 chairs
- Materials cost: Rs. 12.50 lakhs
- Labour cost: Rs. 6.25 lakhs
- Overheads cost: Rs. 5.5 lakhs (60% fixed)
- Total cost: Rs. 24.25 lakhs
- Selling price per chair: Rs. 24
- Total revenue: Rs. 30 lakhs
- Gross profit: Rs. 5.75 lakhs

Statement of Profit at 90% Capacity

- Production: 1,80,000 chairs
- Materials cost: Rs. 16.20 lakhs (6% reduction)
- Labour cost: Rs. 9 lakhs
- Overheads cost: Rs. 6.75 lakhs (60% fixed)
- Total cost: Rs. 31.95 lakhs
- Selling price per chair: Rs. 23.5 (6% reduction)
- Total revenue: Rs. 42.3 lakhs
- Gross profit: Rs. 10.35 lakhs

Break-Even-Point

- Fixed cost: Rs. 3 lakhs (40% of overheads)
- Variable cost per chair: Rs. 20 (materials + labour)
- Contribution per chair: Rs. 5 (selling price - variable cost)
- Break-even-point in units: 60,000 (fixed cost/contribution per chair)

Conclusion

- Shivansh Ltd. can increase its profit by operating at 90% capacity and reducing its selling price by 6%.
- The break-even-point at 50% and 90% capacities is 60,000 chairs.
- The company should focus on increasing its production to achieve economies of scale and reduce its fixed cost per unit.
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Needed a Document for Shivansh ltd. Engaged in manufacturing of steel chair is working at 40% capacity and produces 1,00,000 chairs per month.Materials Rs. 10Labour Rs. 5Overheads Rs. 5 (60% fixed)The selling price is Rs. 25 per chair. If it is desired to work the factory at 50% capacity the selling price falls by 4% at 90% capacity the selling prices falls by6% accompanied by a similar fall in the price of material You are required to prepare a Statement of profit at 50% and 90% capacities and also calculate the break-even-point at this capacity production.? Related: Advanced Corporate Accounting?
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Needed a Document for Shivansh ltd. Engaged in manufacturing of steel chair is working at 40% capacity and produces 1,00,000 chairs per month.Materials Rs. 10Labour Rs. 5Overheads Rs. 5 (60% fixed)The selling price is Rs. 25 per chair. If it is desired to work the factory at 50% capacity the selling price falls by 4% at 90% capacity the selling prices falls by6% accompanied by a similar fall in the price of material You are required to prepare a Statement of profit at 50% and 90% capacities and also calculate the break-even-point at this capacity production.? Related: Advanced Corporate Accounting? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about Needed a Document for Shivansh ltd. Engaged in manufacturing of steel chair is working at 40% capacity and produces 1,00,000 chairs per month.Materials Rs. 10Labour Rs. 5Overheads Rs. 5 (60% fixed)The selling price is Rs. 25 per chair. If it is desired to work the factory at 50% capacity the selling price falls by 4% at 90% capacity the selling prices falls by6% accompanied by a similar fall in the price of material You are required to prepare a Statement of profit at 50% and 90% capacities and also calculate the break-even-point at this capacity production.? Related: Advanced Corporate Accounting? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Needed a Document for Shivansh ltd. Engaged in manufacturing of steel chair is working at 40% capacity and produces 1,00,000 chairs per month.Materials Rs. 10Labour Rs. 5Overheads Rs. 5 (60% fixed)The selling price is Rs. 25 per chair. If it is desired to work the factory at 50% capacity the selling price falls by 4% at 90% capacity the selling prices falls by6% accompanied by a similar fall in the price of material You are required to prepare a Statement of profit at 50% and 90% capacities and also calculate the break-even-point at this capacity production.? Related: Advanced Corporate Accounting?.
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