accounting year. The direct mat? LG Air-conditioning Co. produces refrigerator and sells each for Rs.2000 in an accounting year. The direct material, direct labour and overhead costs are 60%, 20%, and 20% respectively of the cost of sales.
In subsequent accounting year, the direct material cost has increased by 15% and direct labour cost by 17.5%. Due to this increase in costs there would be 50% decrease in the amount of profit if the same selling price is to be maintained.
Compute the new selling price to enable the co. to maintain the same percentage of profit as that earned during the preceding year.
In subsequent accounting year, the direct material cost has increased by 15% and direct labour cost by 17.5%. Due to this increase in costs there would be 50% decrease in the amount of profit if the same selling price is to be maintained.
Compute the new selling price to enable the co. to maintain the same percentage of profit as that earned during the preceding year.