DAVEY WATCH COMPANY CASE 1 - NEW MACHINE WORTH 50000 PURCHASED WITH LIFE OF 7 YEARS SELLING PRICE : 1 RUPEE

1 VARIABLE COST Column1 PAPER TONER POWER TOTAL

COST PER COPY 0.2 0.032 0.04 0.272

PRODUCTION COST Column1 COST PER YEAR CONSUMABLES( DRUM &FLIMS) 1400 MAINTENANCE (REPAIRS) 1000 DEPRECIATION (50000/7) 7142.85 (GIVEN) TOTAL 9542.85

ADMINISTRATION OVERHEAD RENT & ELECTRICITY DESIRED PROFIT (OPPORTUNITY COST) INTEREST AMOUNT

1400 30000

INTEREST RATE / 100 50000 0.1

TOTAL FIXED COST (2+3+4+5) CONTRIBUTION PER PAGE SELLING PRICE 1

45942.85

VARIABLE COST

CONTRIBUTION PER PAGE 0.272 0.728

NO OF COPIES TO SELL EACH YEAR TO GET DESIRED PROFIT TOTAL FIXED COST CONTRIBUTION NO OF COPIES 45942.85 0.728 (GIVEN)

63108.31044

YEARS

INTEREST 5000

DAVEY WATCH COMPANY CASE 2 - REFURBISHED MACHINE WORTH 35000 PURCHASED WITH LIFE OF 5 YEARS SELLING PRICE : 1.1 RUPEE PER PAGE 1 VARIABLE COST Column1 PAPER TONER POWER TOTAL

COST PER COPY 0.2 0.032 0.04 0.272

PRODUCTION COST Column1 CONSUMABLES( DRUM &FLIMS) MAINTENANCE (REPAIRS) DEPRECIATION (35000/5) TOTAL
COST PER YEAR

1400 1000 7000 9400

ADMINISTRATION OVERHEAD RENT & ELECTRICITY DESIRED PROFIT (OPPORTUNITY COST) INTEREST AMOUNT

1400 30000

INTEREST RATE / 100 35000 0.1

INTEREST 3500

TOTAL FIXED COST (2+3+4+5) CONTRIBUTION PER PAGE SELLING PRICE 1.1

44300

VARIABLE COST CONTRIBUTION PER PAGE 0.272 0.828

NO OF COPIES TO SELL TO GET DESIRED PROFIT TOTAL FIXED COST CONTRIBUTION NO OF COPIES 44300 0.828

53502.41546

DAVEY WATCH COMPANY CASE 3 - REFURBISHED MACHINE WORTH 35000 PURCHASED WITH LIFE OF 5 YEARS SELLING PRICE : 0.9 RUPEE PER PAGE 1 VARIABLE COST Column1 PAPER TONER POWER TOTAL

COST PER COPY 0.2 0.032 0.04 0.272

PRODUCTION COST Column1 CONSUMABLES( DRUM &FLIMS) MAINTENANCE (REPAIRS) DEPRECIATION (35000/5) TOTAL
COST PER YEAR

1400 1000 7000 9400

ADMINISTRATION OVERHEAD RENT & ELECTRICITY DESIRED PROFIT (OPPORTUNITY COST) INTEREST AMOUNT

1400 30000

INTEREST RATE / 100 35000 0.1

INTEREST 3500

TOTAL FIXED COST (2+3+4+5) CONTRIBUTION PER PAGE SELLING PRICE 0.9

44300

VARIABLE COST CONTRIBUTION PER PAGE 0.272 0.628

NO OF COPIES TO SELL TO GET DESIRED PROFIT TOTAL FIXED COST CONTRIBUTION NO OF COPIES 44300 0.628

70541.40127

DAVEY WATCH COMPANY CASE 4 - SCHOOL GIVES ORDER FOR 30000 COPIES PER ANNUM AT SELLING PRICE OF 0.85 RUPEE PER PAGE REFURBISHED MACHINE WORTH 35000 PURCHASED WITH LIFE OF 5 YEARS 1 VARIABLE COST Column1 PAPER TONER POWER TOTAL

COST PER COPY 0.2 0.032 0.04 0.272

PRODUCTION COST Column1 CONSUMABLES( DRUM &FLIMS) MAINTENANCE (REPAIRS) DEPRECIATION (35000/5) TOTAL
COST PER YEAR

1400 1000 7000 9400

ADMINISTRATION OVERHEAD RENT & ELECTRICITY DESIRED PROFIT (OPPORTUNITY COST) INTEREST AMOUNT

1400 30000

INTEREST RATE / 100 35000 0.1

TOTAL FIXED COST (2+3+4+5) CONTRIBUTION PER PAGE SELLING PRICE 0.85

44300

VARIABLE COST CONTRIBUTION PER PAGE 0.272 0.578

TOTAL CONTRIBUTION FROM SCHOOL ORDER NO OF COPIES SOLD TO SCHOOL CONTRIBUTION TOTAL CONTRIBUTION 30000 0.578 17340 REMAINING FIXED COST TO BE COMPENSATED (TOTAL FIXED COST- CONTRIBUTION OF SCHOOL ORDER)

26960

NO OF EXTRA COPIES TO BE SOLD AT 1 RUPEE (REMAINING FIXED COST / (1-0.272))

37032.96703

OF 0.85 RUPEE PER PAGE

INTEREST 3500

DAVEY WATCH COMPANY CASE 5: REFURBISHED MACHINE PURCHASED AT 35000 WITH LIFE OF 5 YEARS MAXIMUM COPIES THAT CAN BE SOLD = 30000 TOTAL FIXED COST = (CONTRIBUTION * NO OF COPIES SOLD) 44300=(CONTRIBUTION * 30000) CONTRIBUTION = 1.4777 MINIMUM SELLING PRICE = VARIABLE COST+CONTRIBUTION MINIMUM SELLING PRICE = 0.272+1.477 = 1.749