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Economics, Accounting & Business: Post your doubts here!

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How do you calculate the profit?I've understood the first step in the ms but then don't know how they've come up with 1.9m as the new profit and how the new total costs is calculated.

haha scroll up i have asked the same question! but no one was able to tell me the assumption but i myself came to a cnclusion that profit can be raise after outsourcing with AAP...though the cost of final goods by AAP is higher but still it can increase profits...
how?
it is because there will be no need for supervisors, clerks, and all prodction staff and managers!
so we can assume that managment salaries can be eliminated, as benefit of outsourcing is also the cut in overheads. so if u eliminate $0.75m and $4.25m(direct costs) then u will find a rise in profit by 0.7m!

Total cost before outsourcing=$3m + $1.25 + $0.75m + $1.45m= $6.45m

no subtract $5m($3m + $1.25 + $0.75m) from $6.45m
and add $4.3m(AAP)

the answer should be based on assumption thats all the examiner asked!

so the net impact will be reduction in total cost by $0.7m hence add this reduction in profit $1.2m + $0.7m=$1.9m
 
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Saad Ghori all of mine match with the ones you have mentioned :) I noted all 30 of my answers, but theres the 24 hrs rule, & we have to prepare for business & eco too, so I think you all should note your answers or something & we can discuss all of them freely on friday :)
 
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the awkward moment when you have done your paper 30 mins before the exam ends..
And everyone making weird questions and asking ans!
Miene apne left waley ko cheating kharaye..
end mien hand shake karke ja raha tha :p :D
redapple20
 
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