Situation Analysis:
The Kanpur Confectionaries Private Limited (KCPL) was a family business started by Mohan Kumar Gupta in 1945, and was the second largest biscuit manufacturing company in the north India. The KCPL was manufacturing glucose biscuit using maida, sugar and Vanaspati which they bought from the local market. In the year 1980-81 KCPL doubled its capacity from 120 tonne per month to 240 tonnes per month. The same year turnover was Rs. 2 crores, an increase of 17 over 1979-80. Its net profits were Rs. 20 lakh, an increase of 12 per cent over the previous year.
The glucose biscuit were the growing segment of the biscuit industry. The KCPL was very well known brand in the north India, selling high quality and affordable glucose biscuit.
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127,098
Variable Cost for APL:
Cost of maida = 700*70*(490/50) = Rs. 480,200
Cost of Vansanpathi = 140*70*(500/15) = Rs. 326,666
Cost of sugar = 190*70*(1150/100) = Rs. 152,950
Reimbursement cost of the material from APL= Rs. 959,816
Casual labour charge = Rs. 21,000
Conversion charge per kilo = Rs. 1.5
Revenue from 70 tonnes = 1.5*1000*70 = Rs. 105,000
Cost to APL for conversion charges = 127,098 + 21,000 = Rs. 148,048
Profit from APL per month = 105,000 + 148,000 = -43,098
Profit from KCPL per month = 2,122,000 – 1,914,000 – 217,902 = Rs. 40,098
Total profit per month = 40,098 – 43,098 = Rs. -3000
Loss of = Rs. 3000
Profit from Person:
Raw Material and Labor Cost:
Cost of maida = 750*50*(500/50) = Rs. 375,000
Cost of Vansanpathi = 150*120*(520/15) = Rs. 260,000
Cost of sugar = 200*120*(1200/100) = Rs. 120,000
Cost of preservatives and Packaging = Rs. 50,000
Casual labour charge = Rs. 15,000
Conversion rate paid by Pearson = 3 * 1000 * 50 = Rs. 150,000
Profit to KCPL due to Pearson = 150,000 – 15,000 = Rs. 135,000
Total profit to KPCL = 135,000 – 141,000 = Rs. -6000
Loss = Rs. 6000
2. The process improvement and the technical expertise APL will bring with
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