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Determine annual sales volume proposed expansion to earn

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Reference no: EM132515530

SALES: 1,20,00,000

VC: 72,00,000

FC: 3600000

The present facility allows expansion of sales upto 15laks per year. sales prospect indicate that sales could be increased to 20000000 per year.

  1. under consideration is a plan to expand plant facilities by building a new factory.
  2. the following estimates have been prepared for a plant capable of meeting a sales demand of Rs. 50 laks per year.

investment required- 20 lakhs

desired ROI-10% PER YEAR

annual non variable cost- 8 lakhs ( depreciation 5% 100000+ others 700000)

variable cost in the new plant are expected to remain on the same basis as at present.

You are required to determine:

Question 1: break even sales volume with the present facilities and with the additional plant

Question 2: additional sales volume required to break even on new facilities

Question 3: additional sales volume needed to cover the desired ROI in the new plant

Question 4: annual sales volume proposed expansion to earn the present net income of Rs 12 lakhs

Reference no: EM132515530

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