Скачать или смотреть Given the Cost & Benefit Details Determine Which Plant Will Be More Advantageous | CA Final

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[Question: A manufacture unit engaged in the production of automobile parts is considering a proposal of purchasing one the two plants, details of which are given below:

Particulars Plant A Plant B
Cost ₹ 20,00,000 ₹ 38,00,000
Installation Charges ₹ 4,00,000 ₹ 2,00,000
Life 20 years 15 years
Scrap Value after full life ₹ 4,00,000 ₹ 4,00,000
OutPut per Minute (unites) 200 400

The annual costs of the plants are as follows:
Particulars Plant A Plant B
Running Hours per annum 2,500 2,500
Cost: Wages ₹ 1,00,000 ₹1,40,000
Indirect Materials ₹4,80,000 ₹6,00,000
Repairs ₹80,000 ₹1,00,000
Power ₹2,40,000 ₹2,80,000
Fixed Costs ₹60,000 ₹80,000

Will it be advantageous to buy Plant A or Plant B? Substantiate your answer with the help of comparative unit cost of the plants. Assume interest on Capital at 10 percent. Make other relevant assumptions.]


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