ABC Limited is engaged in the business of Manufacturing alloy components. The CFO of the Company estimates that the Turnover of Company for the forthcoming Financial Year will be ₹100 Crore and thereafter year on year th

ABC Limited is engaged in the business of Manufacturing alloy components. The CFO of the Company estimates that the Turnover of Company for the forthcoming Financial Year will be ₹100 Crore and thereafter year on year the Company can achieve 10% growth. He has also estimated that Earnings Before Interest, Tax, Depreciation and Amortisations (EBITDA) for the forthcoming Financial Year will be 25% on Turnover. He also informs the Management that the Company can maintain the 25% EBITDA, provided there is not much change in the expenditure, as the 80% of expenditure of the Company is variable in nature. However, the purchase head of the Company comes out with the information that price for one of important Raw Material-'A', which forms 50% of the total raw materials is likely to rise upto 30% during the next Financial Year. (Raw Material Cost is estimated to be 60% of the Total Variable Cost). An alternate Raw Material-'P' is available, however it is costlier and it will bring down present EBITDA margin to 20%. It is expected that price of Material- 'P' will be stable in the next Financial Year. Assume there is no change in fixed or other variable expenses except change in Material 'A's price, as a part of the management you are required to: Find out % of Variable and Raw Material cost on Sales if Material 'P' is used and also find out at what levels of increase in Material-'A's price, the Company can opt for use of Raw Material-'P'.