CMA Final · Entrepreneurship and Startup · Value Addition
Kavya Agro, a startup, sells turmeric at Rs 100 per kg bought-in cost Rs 60 per kg, with Rs 15 per kg other direct costs. By grinding and branding, it can sell at Rs 190 per kg, with additional processing and branding cost of Rs 35 per kg on top of existing costs, with bought-in cost unchanged. Compared with selling raw turmeric, what is the incremental profit per kg from the value-added option?
Incremental profit is Rs 55 per kg. Raw sale yields 100-60-15 = Rs 25, while the processed and branded sale yields 190-60-15-35 = Rs 80. The Rs 90 price rise must be reduced by the Rs 35 extra cost.
- ARs 55Correct
- BRs 90
- CRs 130
- DRs 35
Explanation
Raw option profit = 100 - 60 - 15 = Rs 25. Value-added option profit = 190 - 60 - 15 - 35 = Rs 80. Incremental profit = 80 - 25 = Rs 55. Rs 90 is the revenue increase ignoring the extra cost of Rs 35, which is the key error.
Did you get it right without looking?
One question tells you little. A timed set on Value Addition shows your real accuracy, how long you take and where you lose marks.
More Value Addition questions
- A startup buys raw cotton at Rs 80 per metre-equivalent and, after weaving, dyeing and branding, sells finished fabric at Rs 130 per metre-e…
- A startup providing a basic mobile app adds a free personalised onboarding and 24x7 customer support to every subscription without changing …
- A Pune agri-startup stops selling raw turmeric to traders and instead sells packaged, certified, branded turmeric powder directly to consume…
- Which statement about 'value addition' by a startup through a strong brand is most accurate?
- Anaya Foods buys tomatoes at ₹20 per kg and converts each kg into 0.5 kg of sauce, with processing and packing cost of ₹15 per kg of tomatoe…
- A Pune startup buys plain cotton fabric and sells it to garment makers. It now plans to dye, print and stitch the fabric into finished kurta…