Case Hardhat Ltd.

Sales Units 100000 units

Total Variable Cost 6000000
Ratios 3
Material
6000000 * 3/6
3000000

Per Unit Cost 30 per unit

Calculations
Increased Budget 30% inc in Sales Units
20% per unit inc in Material Cost
5 % per unit inc in Direct Labour
10% ince in variable
5 % inc in Fixed Cost
8% inc in Selling price
6% inc in Admin cost

Question Number 1
Increased units 130000
Selling Price
Variable Cost
Material
Direct Labour
Production
Selling Expense
Total Variable Cost
Contribution
Fixed Cost
Fixed Indirect
Admin Expense
Total Fixed Cost
Net Profit

Therefore Selling Price = 13504800/130000

Question Number 2
Nummber of Units x
Selling Price
Variable Cost Material
Direct Labour
Production
Selling Expense
Total Variable Cost
Contribution
Fixed Cost
Fixed Indirect
Admin Expense
Total Fixed Cost
Net Profit

Therefore Numer of Units Sold = 32.44x-1620000 = 3102000

Question Number 3(a)

Number of Units Sold 100000+ 10% of 100000
Selling Price 103.88 per unit
Variable Cost Material
Direct Labour
Production
Selling Expense
Total Variable Cost
Contribution
Fixed Cost
Fixed Indirect
Admin Expense
Total Fixed Cost
Net Profit
Therefore Netprofit with 10% increase in sales is 1353200

Question Number 3(b)

Number of Units Sold 100000+ 20% of 100000
Selling Price 103.88 per unit
Variable Cost Material
Direct Labour
Production
Selling Expense
Total Variable Cost
Contribution
Fixed Cost
Fixed Indirect
 Admin Expense
Total Fixed Cost
Net Profit
Therefore Netprofit with 20% increase in sales is 1676400

Conclusion
Since we are aware that sales at the best case would increase by only 20000, hence we would consider 120000
desired target. This would make us increase our cost per unit to 106.576 per unit.
Once the target is achieved, in the Long run we would again reduce the price to previous price in order to mant

Question Number 4
1. Demand Analysis: Before increasing the number of units depending on the capacity, demand needs to be con
could be manufactured saving the inventory cost.

2. Break Even Analysis: Depending the profit target, the break even point needs to be set. Depending on the de
of units, the price of individual could be set. Once the break even is achieved, the price could be further increas
se Hardhat Ltd.

2 1
Direct Labour Producion
6000000 * 2/6 6000000 * 1/6
2000000 1000000
Fixed 40000
20 per unit 9.6 per unit

100000 + 30% of 100000 130000 units

30 + 20 % of 30 36 per unit
20 + 5% of 20 21 per unit
9.6 + 105 of 9.6 10.56 per unit
40000 + 5% of 40000 42000
1500000 + 8% of 1500000 1620
1000000 + 6% of 1000000 1060

?*130000 13504800

36*130000 4680000
21*130000 2730000
10.56*130000 1372800
1620000
10402800
3102000

42000
1060000
1102000
2000000

103.883076923077
 100*x 100x
36*x
21*x
10.56*x 67.56x
1620000
32.44x-1620000
3102000

42000
1060000
1102000
2000000

x = 145561

110000
103.88*110000 11426800
36*110000 3960000
21*110000 2310000
10.56*110000 1161600
8/30*10 = 150000 + 2.67% of 15000 1540000
8971600
2455200

42000
1060000
1102000
1353200
increase in sales is 1353200

120000
103.88*120000 12465600
36*120000 4320000
21*120000 2520000
10.56*120000 1267200
8/30*20 = 15000 + 5.34% of 15000 1580000
9687200
2778400

42000
 1060000
1102000
1676400
increase in sales is 1676400

ncrease by only 20000, hence we would consider 120000 as the break even point to achieve the
er unit to 106.576 per unit.
again reduce the price to previous price in order to mantain the customers trust and loyalty

units depending on the capacity, demand needs to be considered so as an accurate number of units

e break even point needs to be set. Depending on the desired profit and the demand of the number
break even is achieved, the price could be further increased or decreased in long run