DAVEY BR

CASE I II III IV V
Particulars

Refurbished machine is purchased @35000 New machine is purchased @ 50000 Refurbished machine is purchased @35000 and SP i Refurbished machine is purchased @35000 and SP d A school giving additional order of 30000 pages p.a.
Unit/Periodicity

Sr No

1 Ravinder's salary at ELECON (1/3 for photocopy) (Assumption) 2 Loan for machine 3 Life of machine 4 Loan (rate of interest) 5 Depreciation 6 Days in a year (Assumption) 7 Photocopies per day (Assumption) 8 Photocopy paper 9 Toner 10 Power 11 Drum 12 Film 13 Electricity (1/3rd for photocopy)(Assumption) 14 Shop rent (1/3rd for photocopy) (Assumption) 15 Repair & maintenance

monthly p.a. for 5 years n p.a. for 5 years annualy per day per day per copy
Per Kg & per 25000 copy

per copy bi-annualy bi-annualy monthly monthly annually

Selling Price Per Copy

Rupees Rupees Rupees Rupees Unit Ratio

VARIABLE COST
Paper Toner Power Consumption Contribution Per Unit Contribtion Ratio Volume Units Contribution in Rs Fixed Costs (excluding Depreciation,salary and interest)

Rupees

Rupees

Operating profit
Desired profit (Opportunity cost+int+depreciation) Rupees

NET PROFIT
Break Even Point Break Even Point Units

Rupees

1 As by accepting the additional offer Net Profit is positive, hence the offer should be accepted. 2 The fixed cost is covered in all the cases but the desired profit is more, so the overall profit has been negativ

DAVEY BROTHERS WATCH CO.

chine is purchased @35000 purchased @ 50000 chine is purchased @35000 and SP increases by 10% chine is purchased @35000 and SP decreases by 10% dditional order of 30000 pages p.a. if the SP is 0.85 per copy
Cost/ Revenue

II

III

IV
Regular

2500 35000 5 10% 7000 300 100 0.2 0.032 0.04 800 2000 250 100 1000

2500 50000 7 10% 7143 300 100

2500 35000 5 10% 7000 300 100

2500 35000 5 10% 7000 300 100

2500 35000 5 10% 7000 300 100

I
1 0.20 0.032 0.04 0.728 0.728 30000 21840

II
1 0.20 0.032 0.04 0.73 0.73 30000 21840

III
1.1 0.20 0.032 0.04 0.83 0.75 30000 22582

IV
Regular
0.9 0.20 0.032 0.04 0.63 0.70 30000 20933

V
1 0.20 0.032 0.04 0.73 0.73 30000 21840

3800

3800

3800

3800

3800

18040
20500

18040
22143

18782
20500

17133
20500

38440
20500

-2460
33379 24300

-4103
35636 25943

-1718
29348 24300

-3367
38694 24300

17940
33379 24300

r should be accepted. o the overall profit has been negative

additional 2500 -

Fixed

Variable Variable variable Fixed Fixed Fixed Fixed Fixed

V
additional
0.85 0.20 0.032 0.04 0.58 0.68 30000 20400

NIL*

* All fixed costs are covered by regular business

38440
NIL

17940