Aditya Ahluwalia Ankur Jain Gurveen Singh Taneja Kaustubh Mohite Mithun Naik Varun Garg

GROUP 9 11P122 11P124 11P140 11P143 11P149 11P179

Total Selling cost = Selling Cost + Sales commissions Promotion and Advertising cost only for ovens As 2 teams are working independently in core and non core area so sales commission will be equally divided between the two Only the selling cost has become 2.5 times from 1983 to 1985

Year 1983 1985

Activity Selling Selling Selling

Stove (Units) 30,000 25,000

Oven (Units)

Total Cost 1,540,00 0 (40%) 1,283,33 3

Per Unit Cost 51.33 51.33 92.08 12.08

20,000 25,000 5,000

1,841,66 7 362,500

1985

Sales com. (Core) Sales com. (Non Core) Total Selling Total Selling

15,000

362,500

24.17

25,000 20,000

1,585,33 3 2,325,00 0

63.41 116.25

Stove

Oven

Total manufacturing cost (per unit) Total shipping cost (per unit) Total selling cost (per unit) Unit Variable cost Unit Price Contribution margin Fixed Overhead

163 33 63.41 259.41 300 40.59 1,225,000

189 83.5 116.25 388.5 350 (38.5) 1,300,000

Company is not able to recover the variable cost (negative contribution margin) in case of ovens so it has to increase the unit price of ovens.

Thank You