ABC & Co. is a contract manufacturer in the textile industry. It manufactures formal shirts under licence from brand owners. The installed capacity is 18,000 units. It is estimated that the current year sales will be

CS Executive · Corporate Accounting and Financial Management · PYQS · December 2025
ABC & Co. is a contract manufacturer in the textile industry. It manufactures formal shirts under licence from brand owners. The installed capacity is 18,000 units. It is estimated that the current year sales will be 15,000 units. Other details: Variable cost per unit INR Raw materials 30/- Labour cost 10/- Other variable costs 20/- Fixed costs are expected to be ₹ 4,80,000/- You are required to calculate selling price to be quoted for a desired profit of ₹ 4,20,000/-

Answer & Explanation:

Calculation of selling price per unit Raw materials ₹ 30 Labour cost ₹ 10 Other variable costs ₹ 20 A Total variable cost per unit ₹ 60 B Units sold 15,000 C=A x B Total variable cost ₹ 9,00,000 D Total fixed cost ₹ 4,80,000 E=C+D Total cost ₹ 13,80,000 F desired profit ₹ 4,20,000 G=E+F Desired sales ₹ 18,00,000 H Units sold 15,000 G/H Selling price per unit ₹ 120

Topics: Financial Management

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