PQR Ltd. is considering two new products A and B, only one of which can be added to its production line. Product A is sure seller. It is certain…

CA Final · Advanced Financial Management · PYQS · January 2026
PQR Ltd. is considering two new products A and B, only one of which can be added to its production line. Product A is sure seller. It is certain that 2,00,000 units of product A with the firm's maximum capacity can be manufactured and sold each year with a contribution margin of 5 per unit. Product B with a contribution margin of 10 per unit is potentially more profitable. However, there is uncertainty about its marketability and following sales forecast has been prepared: Sales units of B (per annum) Probability 50,000 0.25 1,00,000 0.50 1,50,000 0.25 Fixed cost per year is 6,00,000, From the information given above, choose the correct answer to the following Question No. 13 to 15:
(A) (A) ₹ 2,00,000
(B) (B) ₹ 4,00,000
(C) (C) ₹ 6,00,000
(D) (D) ₹ 10,00,000

Suggested Answer and Working Notes:

Correct Answer: Option (B)

(B) ₹ 4,00,000

Topics: Interest Rate Risk Management

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