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M/s. ABC & Co. is planning to use the most competitive manufacturing process to produce an ultramodern sports shoe. They can use a fully automatic robot-controlled plant with an investment of Rs. 100 million; alternately they can go in for a cellular manufacturing that has a fixed cost of Rs. 80 million. There is yet another choice of traditional manufacture that needs in investment of Rs. 75 million only. The fully automatic plant can turn out a shoe at a unit variable cost of Rs. 25 per unit, whereas the cellular and the job shop layout would lead to a variable cost of Rs. 40 and Rs. 50 respectively. The break even analysis shows that the break even quantities using automatic plant vs traditional plant are in the ratio of 1: 2. The per unit revenue used in the break even calculation is: 
  • a)
    Rs. 75  
  • b)
    Rs. 87  
  • c)
    Rs. 57  
  • d)
    Rs. 55 
Correct answer is option 'A'. Can you explain this answer?
Most Upvoted Answer
M/s. ABC & Co. is planning to use the most competitive manufacturi...
Break Even Analysis for Manufacturing Process of Ultramodern Sports Shoe

Investment Options:
- Fully automatic robot-controlled plant: Rs. 100 million
- Cellular manufacturing: Rs. 80 million
- Traditional manufacturing: Rs. 75 million

Unit Variable Cost:
- Fully automatic plant: Rs. 25 per unit
- Cellular: Rs. 40 per unit
- Job shop layout: Rs. 50 per unit

Break Even Analysis:
- Ratio of break even quantities using automatic plant vs traditional plant: 1:2
- Per unit revenue used in break even calculation: Rs. 75

Calculation:
- Break even quantity for automatic plant: (100,000,000 / 25) = 4,000,000 units
- Break even quantity for traditional plant: (75,000,000 / (75/2)) = 1,000,000 units
- Ratio of break even quantities: 4,000,000 / 1,000,000 = 1:2
- Total revenue required for break even: (4,000,000 x 75) + (1,000,000 x 75) = 375,000,000
- Per unit revenue for break even: 375,000,000 / (4,000,000 + 1,000,000) = Rs. 75

Therefore, the correct option is 'A' (Rs. 75) as this is the per unit revenue used in the break even calculation.
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Community Answer
M/s. ABC & Co. is planning to use the most competitive manufacturi...
I think the ratio is 2:1
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M/s. ABC & Co. is planning to use the most competitive manufacturing process to produce an ultramodern sports shoe. They can use a fully automatic robot-controlled plant with an investment of Rs. 100 million; alternately they can go in for a cellular manufacturing that has a fixed cost of Rs. 80 million. There is yet another choice of traditional manufacture that needs in investment of Rs. 75 million only. The fully automatic plant can turn out a shoe at a unit variable cost of Rs. 25 per unit, whereas the cellular and the job shop layout would lead to a variable cost of Rs. 40 and Rs. 50 respectively. The break even analysis shows that the break even quantities using automatic plant vs traditional plant are in the ratio of 1: 2. The per unit revenue used in the break even calculation is:a)Rs. 75 b)Rs. 87 c)Rs. 57 d)Rs. 55Correct answer is option 'A'. Can you explain this answer?
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M/s. ABC & Co. is planning to use the most competitive manufacturing process to produce an ultramodern sports shoe. They can use a fully automatic robot-controlled plant with an investment of Rs. 100 million; alternately they can go in for a cellular manufacturing that has a fixed cost of Rs. 80 million. There is yet another choice of traditional manufacture that needs in investment of Rs. 75 million only. The fully automatic plant can turn out a shoe at a unit variable cost of Rs. 25 per unit, whereas the cellular and the job shop layout would lead to a variable cost of Rs. 40 and Rs. 50 respectively. The break even analysis shows that the break even quantities using automatic plant vs traditional plant are in the ratio of 1: 2. The per unit revenue used in the break even calculation is:a)Rs. 75 b)Rs. 87 c)Rs. 57 d)Rs. 55Correct answer is option 'A'. Can you explain this answer? for Mechanical Engineering 2024 is part of Mechanical Engineering preparation. The Question and answers have been prepared according to the Mechanical Engineering exam syllabus. Information about M/s. ABC & Co. is planning to use the most competitive manufacturing process to produce an ultramodern sports shoe. They can use a fully automatic robot-controlled plant with an investment of Rs. 100 million; alternately they can go in for a cellular manufacturing that has a fixed cost of Rs. 80 million. There is yet another choice of traditional manufacture that needs in investment of Rs. 75 million only. The fully automatic plant can turn out a shoe at a unit variable cost of Rs. 25 per unit, whereas the cellular and the job shop layout would lead to a variable cost of Rs. 40 and Rs. 50 respectively. The break even analysis shows that the break even quantities using automatic plant vs traditional plant are in the ratio of 1: 2. The per unit revenue used in the break even calculation is:a)Rs. 75 b)Rs. 87 c)Rs. 57 d)Rs. 55Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for Mechanical Engineering 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for M/s. ABC & Co. is planning to use the most competitive manufacturing process to produce an ultramodern sports shoe. They can use a fully automatic robot-controlled plant with an investment of Rs. 100 million; alternately they can go in for a cellular manufacturing that has a fixed cost of Rs. 80 million. There is yet another choice of traditional manufacture that needs in investment of Rs. 75 million only. The fully automatic plant can turn out a shoe at a unit variable cost of Rs. 25 per unit, whereas the cellular and the job shop layout would lead to a variable cost of Rs. 40 and Rs. 50 respectively. The break even analysis shows that the break even quantities using automatic plant vs traditional plant are in the ratio of 1: 2. The per unit revenue used in the break even calculation is:a)Rs. 75 b)Rs. 87 c)Rs. 57 d)Rs. 55Correct answer is option 'A'. Can you explain this answer?.
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