Project ForgePlant Design & Economics
Profitability Analysis
GATE 2020
Medium
Annual capacity of a plant producing phenol is 100 metric tons. Phenol sells at INR 200/kg, production cost is INR 50/kg. Annual fixed charges, overhead and general expenses total INR 30,00,000. Taxes are 18% on gross profit (after fixed charges). At full capacity with all product sold, the annual net profit (INR) is
- A1,39,40,000
- B1,50,00,000
- 98,40,000
- D1,20,00,000
Explanation
Revenue=100,000kg×200=2,00,00,000. Production cost=100,000×50=50,00,000. Gross profit (after fixed charges)=2,00,00,000−50,00,000−30,00,000=1,20,00,000. Tax=18%×1,20,00,000=21,60,000. Net profit=1,20,00,000−21,60,000=98,40,000.
Source: GATE CH 2020 (2020)
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