Q41
The annual fixed costs of a product are known to be $200,000 andthe annual net profit $40,000 the average monthly sale being 820units. A new design is contemplated, involving an expenditure forpreparations amounting to $ 80,000, to be returned in two years. Itis expected that with new production methods the P/V ratio may beincreased by 5 per cent. What should the annual sales figure forthe new design be (a) so that the same net profit will be realized;(b) so that in addition to this profit a yield of 10 per cent onthe capital invested will be obtained? [2 Marks]
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