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Q5. Reprographics Ltd. manufactures a document reproducing machine which has a variable cost structure as...

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Q5. Reprographics Ltd. manufactures a document reproducing machine which has a variable cost structure as follows: Material Rs. 40 Labour Rs. 10 Overhead Rs. 4 Selling Price Rs. 90 Sales during the current year are expected to be Rs. 13,50,000 and Fixed Overhead Rs. 1,40.000 Under a wage agreement, an increase of 10% is payable to all direct workers from the beginning of the forthcoming year, while material cost are expected to increase by 71/2%, variable overhead costs by 5% and fixed overhead costs by 3% You are required to calculate: a) The new selling price if the current Profit/Volume Ratio is to be maintained and b) The quantity to be sold during the forthcoming year to yield the same amount of profit as current year assuming the selling price to remain at Rs. 90

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