A company manufactures radios, which are sold at Rs. 1,600 per unit. The total cost is composed
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A company manufactures radios, which are sold at Rs. 1,600 per unit. The total cost is composed of 30% for direct materials, 40% for direct wages and 30% for overheads. An increase in material price by 30% and in wage rates by 10% is expected in the forthcoming year, as a result of which the profit at current selling price may decrease by 40% of the present profit per unit. You are required to prepare a statement showing current and future profits at present selling price.
How much selling price should be increased to maintain the present rate of profit?
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