The profi tability position of M/s Pioneer Industries Ltd for a year is as follows:

The profi t for the year did not match with company’s expectation and the works management attributed it to labour turnover.
Analysis of data revealed the following:

The effectiveness of direct labour hours put in by apprentice workmen was 50% and the delay in replacing against the separations resulted in a loss of 20,000 direct labour hours.
Calculate the loss or profi t on account of loss of production from labour turnover.

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Annual turnover Variable costs: Direct material Rs. (in Lakhs) 200 60 Direct labour 40 Variable overheads 50 150 Marginal contribution 50 Fixed overheads 10 Profit for the year 40