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    Pricing Decision 1

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    rayhan
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    © All Rights Reserved
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    Pricing Decision 1

    Uploaded by

    rayhan
    5 views2 pages
    Excellent

    Copyright

    © © All Rights Reserved

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    5 views2 pages

    Pricing Decision 1

    Uploaded by

    rayhan
    Excellent

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    You are on page 1of 2

    Ex.

    12 MAM
    Req 1.
    Determination of Selling Price

    Total(Tk.) Per unit(Tk.)


    Req. 1. ( Total 5,000 units)
    Variable costs:
    D/ materials 75,000
    D/ labour 65,000
    Factory overhead ( .3 x 90,000) 27,000
    Adm. Expenses( .1 x 35,000) 3,500
    Selling & distribution expenses( .4 x 20,000) 8,000 1,78,500

    Fixed costs:
    Factory overhead(.7 x 90,000) 63,000
    Adm. Expenses( .9 x 35,000) 31,500
    Selling & distribution expenses( .6 x 20,000) 12,000 1,06,500
    Total costs or full costs 2,85,000 57.00
    Profit(20% on full costs: 20% x 2,85,000) 57,000 11.40
    Sales 68.40

    OR
    Selling price = (1 + Markup) = (1 + .20) = 1.20

    Total costs or full costs 2,85,000


    Profit (Balancing figure) 57,000
    Sales ( 1.20) x 2,85,000) 3,42,000 68.40

    OR
    Very simply,
    Cost per unit x selling price = 57 x 1.20 = 68.40

    Req. 2
    Total variable costs
    Add profit (90%) 1,78,500
    Sales 160,650 67.83
    3,39,150

    Req 3.
    Determination of profit

    Total( Tk.) Per unit( Tk.)


    Conversion costs:
    D/ labour 65,000
    Overhead 90,000
    1,55,000
    Gross profit (80%) of conversion cost i.e. 1.8 x
    1,55,000) 1,24,000
    Less:
    Administrative expenses 35,000
    Selling expenses 20,000 55,000
    Net profit 69,000
    Req. 4. Determination of selling price

    Total (Tk.) Cost per unit(Tk.)


    Variable costs: (Total 6,000 units)
    D/ material{(75,000 ÷ 5,000) x 6,000} 90,000
    D/ labour {(65,000 ÷ 5,000) x 6,000} 78,000
    Factory overhead{(27,000 ÷ 5,000) x 6,000} 32,400
    Adm expenses {(3,500 ÷ 5,000) x 6,000} 4,200
    Sell. Expenses {(8,000 ÷ 5,000) x 6,000} 9,600 2,14,200
    Fixed costs:
    Factory overhead 63,000
    Adm expenses 31,500
    Sell. Expenses 12,000
    106,500
    Full costs 3,20,700
    Profits( .20 x 3,11,100) 64,140
    3,84,840 64.14

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