The directors of Goodluck Ltd are considering the results of the profit and loss statement for the year that ended on 31 December 2009. The extract is as follows:
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the budgeted capacity of the company is rs 20 00 000 but the key factor is sales dem 608704
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15,00,000 |
|
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Direct materials |
4,50,000 |
|
|
Direct wages |
3,00,000 |
|
|
Variable overheads |
1,20,000 |
|
|
Fixed overheads |
4,40,000 |
13,10,000 |
|
Profit |
1,90,000 |
16.9.7.1 Effect of Change in Selling Price
The budgeted capacity of the company is Rs. 20,00,000, but the key factor is sales demand. The sales manager is proposing that in order to utilize the existing capacity, the selling price of the only product manufactured by the company should be reduced by 5%.
You are required to prepare a forecast statement which should show the effect of the proposed reduction in the selling price and to include any changes in the costs expected during the year 2010.
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