1) The document analyzes two cases involving production decisions for products A, B, X, and Y using contribution margin analysis and incremental analysis. In Case 1, producing all products generates the highest profit of Rs. 41,000. In Case 2, converting the machines to be more versatile generates even higher profit of Rs. 68,860. 2) Case 3 evaluates whether a company should manufacture or buy tubes. Buying tubes is determined to be more profitable, generating profits of Rs. 96,000 for 3 lakh units compared to Rs. 75,000 if manufactured. 3) To maintain the initial profit level of Rs. 75,000, the company should increase sales to 420000 units.

1. CVP Analysis/ Incremental Analysis/ Decision MakingMohit Kumar singhKrishnapriyaPremchandra M.JagmeetKaur

2. Case 3P A or B or Both.Q X or Y or Both.Minimum quantity to be produced A and B: 1500 each X and Y: 1200 eachMachine Hours Available: P: 4500 Q:5100

3. Solution 1T1.Before Conversion:Considering Machine PA Contribution Margin=18B Contribution Margin=35Since A has a lower contribution margin, it will give less Profit.So, the minimum amount required to be produced for A is 1500 units.For B, 3000 MHs is available. (4500-1500)So, No of units of B= 3000/1.25=> 2400 units

4. Now Considering Machine Q.X Contribution Margin: 50Y Contribution Margin: 60X Minimum=1200 Units. ( 1 unit: 1.25 MH)Total MH required for X= 1500.MHs available for Y: 5100-1500=3600 MHs.No. of Units for Y: 3600/0.8= 4500 Units.

5. Total Contribution Units Contribution A 1500 * 18 =27000 B 2400 * 35 =84000 X 1200 * 50 =60000 Y 4500 * 60 =270000Total Contribution= 441000Profit= Total Contribution-FC =441000-400000 =41000

6. After Conversion VersatilityContribution Margin OrderY > X > B > A. 1200 1500 1500Total MH=9600X+A+B= 4200 Units

7. MH used: Units MH Total A 1500 1 1500 B 1500 1.25 1875 X 1200 1.25 1500 Y 4725 Y= 4725/0.8=5906 UNITS

8. Total Contribution Margin after Conversion Cont margin Units TotalA 18 1500 27000B 35 1500 52500X 50 1200 60000Y 60 5906 354360TOTAL 493860Profit= Tcont – FC =493860-(425000) =68860.Yes, Profit is more by 27860. (68860-41000)

9. Case 4

10. Equipment is ordered. (Company Manufactures)Sales Per tube: 240/24=10Cost Per tube: 234/24=9.75For 3 lakh units: Total Profit= 300000*(10-9.75)=75000For 3.5 lakhunits 350000*(10-9.75)-30000=57500For 4.5 lakh units450000*(.25)-30000=82500

11. If it buysSelling price=Rs.10Cost= (0.8*108+.9*72+.9*54)/24+1.35 =9.68Contribution margin=10-9.68=.32For 3 lakh units: Total Profit= 300000*.32=96000For 3.5 lakh units 350000*.32=112000For 4.5 lakh units450000*.32=144000Since profit is more if it buys,the company must buy rather than manufacture tubes

12. Volume of sales.. ?Assumption- Initially profit was 75000 With increase in capacity to 3.5 lakhs, profit came down to 57500Economical scenario assumed is 7500075000= .25*sales-30000 (Profit=CM-Fc)X=42000, i.e. should produce 420000, so as to equal profit.