The cost per unit of three products X,Y and Z of a company are given as follows:

Production arrangements are such that if one product is given up, the production of the others can be raised by 50%. The directors propose that Z should be given up because the contribution from the product is the lowest.
Present suitable analysis of the data indicates whether the proposal should be accepted.

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Product X Product Y Product Z Particulars Rs. Rs. Rs. Direct material 10 8 6 Direct labour 6 7 Variable expenses 4 5 63 Fixed expenses 3 3 2 23 23 20 Profit 9 7 6 Selling price 32 30 26 Number of units 20,000 10,000 16,000 Produced