current 2009

production
sales
price/kg INR

15%
500000
23.8
47.6

500000
27.37
54.74

raw material 55 %
direct labour 5%
packaging 10%
advertizing cost 3%
misc. expenses 3%
indirect cost 5%
distribution 5%

13.09
1.19
2.38
0.71
0.71
1.19
1.19

13.09
1.19
3.2
1.8
0.71
1.19
1.19

total variable cost incurred

Variale cost per kg
fixed cost

20.46
40.92
1.5

22.37
44.74
1.5

6.68

10

1.84
7.73%

3.5
12.79%

contribution
margin

20%

25%

30%

500000
32.844
65.688

500000
41.055
82.11

500000
53.3715
106.743

0
0
1.5

0
0
1.5

0
0
1.5

65.688

82.11

106.743

31.344
95.43%

39.555
96.35%

51.8715
97.19%

we have assumed to keep the no. of units

being sold to be constant and simultaneously
the increase in price happens to be 54.74/kg
and by changing the positioning a bit to
change the VFM tag and introduce a new advertising strategy we will incur
extra cost in that area but we will improve our margins to 12.79%

we have increased the packaging cost to 12%

we have increased the advertizing cost to 7%