Reprographics Ltd. manufactures a document-reproducing machine that has a variable cost structure as follows:

Sales during the current year are expected to be `13,50,000 and fixed overheads, of 1,40,000. Under a wage agreement, an increase of 10 percent is payable to all direct workers from the beginning of the forthcoming year, while the material costs are expected to increase by 7.5 percent, variable overhead costs by 5 percent, and fixed overhead costs by 3 percent. 

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 the current year, assuming the selling price is to remain at `90.
 

Transcribed Image Text:

Material Labour Overheads Selling price 240 10 4 90 Material Labour Overheads Selling price 240 10 4 90

Answer rating: 100% (QA)

a The new selling price can be calculated using the following formula New Selling Price Total Variab... View the full answer