Understanding the Problem: Plastic Buckets Profit Calculation

This question asks us to determine the specific number of plastic buckets A Ltd. needs to sell to achieve a desired profit of ₹90,000. We are given the selling price per bucket, the variable cost per bucket, and the total fixed costs for the year.

Data Provided

Let's list the information given in the question:

Calculating Contribution Margin per Bucket

The Contribution Margin is the amount each unit sold contributes towards covering fixed costs and generating profit. It's calculated as Selling Price per unit minus Variable Cost per unit.

Using LaTeX notation:

Plugging in the values:

So, each bucket sold generates ₹150 to cover fixed costs and contribute to profit.

Determining the Number of Buckets for Target Profit

The formula to calculate the number of units needed to achieve a specific profit is:

This formula works because the total contribution margin (CM per unit multiplied by the number of units) must cover both the fixed costs and the desired profit.

Step-by-Step Calculation:

1. Add Target Profit and Fixed Costs: First, sum the desired profit and the total fixed costs. This gives the total amount that needs to be covered by the contribution margin from sales. $ \text{Required Contribution} = \text{Target Profit} + \text{Total Fixed Costs} $ $ \text{Required Contribution} = ₹90,000 + ₹1,50,000 $ $ \text{Required Contribution} = ₹2,40,000 $
2. Divide by Contribution Margin per Bucket: Divide the total required contribution by the contribution margin generated by each bucket. $ \text{Number of Buckets} = \frac{₹2,40,000}{₹150 \text{ per bucket}} $ $ \text{Number of Buckets} = 1600 $

Conclusion

A Ltd. needs to sell 1600 buckets to achieve a profit of ₹90,000, considering the given selling price, variable cost, and fixed costs.