Impact of Design (Improvement of product features and value

engineering) on Profit
 Price increase (Premium on account of improved features) and Profit
Premium 5% Premium 10%
Unit(Nos.) 1000 1000 1000
Increase in Price (Premium due to features)
Revenue (Rs.) 11L 11.55L 12.1L
Lab.+OH+OE(Rs.) 4L 4.04 (Consider 1% increase) 4.08 (2% increase)

Matl. Cost 6L 6L 6L
Profit(Rs.) 1L 1.51L 2.02L

Increase in profit due to Premium Pricing 50% (approx.) 100% (approx.)

Assumed Sales Price/Unit = Rs.1100/-

2
 Material Cost Reduction (Value Engineering/ Design) and Profit
MC Reduction 5% MC Reduction 10%
Unit(Nos.) 1000 1000 1000
Reduction in Material Cost (Value Engineering/ Design)
Revenue (Rs.) 11L 11L 11L
Lab.+OH+OE(Rs.) 4L 4.04 (Consider 1% increase) 4.08L (2% increase)

Matl. Cost 6L 5.7L 5.4L

Profit(Rs.) 1L 1.26L 1.52L

Increase in profit due to MC Reduction 25% (Approx) 50% (Approx)

Assumed Sales Price/Unit = Rs.1100/-