A Limited company has capacity to produce 1,00,000 units of a product every month. Its works cost at varying levels of production is as under:

Its fi xed administration expenses amount to Rs. 1,50,000 and fi xed marketing expenses amount to Rs. 2,50,000 per month. The variable distribution cost amounts to Rs. 30 per unit. It can market 100% of its output at Rs. 500 per unit provided it incurs the following further expenditure:

(a) It gives gift items costing Rs. 30 per unit of sale.

(b) It has lucky draws every month giving the fi rst prize of Rs. 50,000, second prize of Rs. 25,000, third prize of Rs. 10,000 and three consolation prizes of Rs. 5000 each to customers buying the product.

(c) It spends Rs. 1,00,000 on refreshments served every month to its customers.

(d) It sponsors a television programme every week at a cost of Rs. 20,00,000 per month.
It can market 30% of its output at Rs. 550 per unit without incurring any of the expenses referred to in (1) to (4) above.

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Works Works cost per cost per Level unit (Rs.) Level unit Rs. 10% 400 60% 350 20% 390 70% 340 30% 380 80% 330 40% 370 90% 320 50% 360 100% 310