A retail dealer in garments is currently selling 40, 000 shirts annually. He supplies the...
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Accounting
A retail dealer in garments is currently selling 40, 000 shirts annually. He supplies the following details for the year ended 31st March 2015.
Selling price per shirt: Rs. 1,800
Variable cost per shirt: Rs. 1,200
Fixed Cost:
Staff salaries: Rs. 4,400,000
General Office Cost: Rs. 2,000,000
Advertising Cost: Rs. 2,200,000
As a Cost Accountant, you are required to answer the following each part independently:
1. Calculate Break Even Point and margin of safety in sales revenue and number of shirts sold.
2. Assume that 25,000 shirts were sold during the year, find out the net profit of the firm.
3. Assuming that in the coming year, an additional staff salary of Rs. 1,000,000 is anticipated, and price of shirt and variable cost are likely to be increased by 10%, what should be the breakeven point in number of shirts and sales?
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