Below data pertains to Rocky Ltd. which manufacturers motors and pumps. Company has three products, and the cost data are given below

Pumps	Motors	Flow Controllers
Unit Sales	100000	75000	10000
Unit Selling Price	700	800	1800
Variable Manuf. Cost	350	400	800
Variable Selling Cost	50	75	100

Rockey Ltd. Fixed costs are equal to 44,400,000. Rockey ltd is subject to ta tax rate of 30%.

1. What is the BEP for each product assuming the sales mix remains the same
2. In the coming period company expects the variable manufacturing cost of the flow controllers to increase by 20%. What will be the new BEP if the sales mix remains the same
3. The company expects a higher demand for Flow controllers. They expect the demand to double from the current 10,000 units in the next five years. Company is thinking of automating the plant which will reduce the variable cost by Rs. 50 and will also lead to a increase in the fixed cost by 5 million. Should the company automate their plant?? What are the other alternatives that you propose for the company?

Answer rating: 100% (QA)

a The BEP for each product assuming the sales mix remains the same Pumps BEP Fixed Costs Contributio... View the full answer