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2 Alpine Industries Limited is manufacturing a uniform product with a selling price of Rs. 10/- each. At present the company is operating at 60%
2 Alpine Industries Limited is manufacturing a uniform product with a selling price of Rs. 10/- each. At present the company is operating at 60% capacity at which sales levels are RS. 60,000. The following information regarding costs is available: 0 Variable costs are Rs. 2 per unit (ii) Semi-variable costs may be considered fixed at Rs. 6000 with a variable cost of Rs. 0.50 per unit. (iii) Fixed costs are Rs. 20,000 at the present level of activity but it is estimated that the attainment of 80% to 90% level would increase costs by Rs 4,000 A proposal has been made to the directors that the price of the product a be reduced by 10% to reach a wider market. The board is considering the proposal and requires the statement showing The operating profit if the factory is operating at a level of 60%, 70%, 80%, and 90% assuming that (0) The selling price remains as at present it is reduced to Rs. 9 per unit. The percentage increase on the present output which will be required to maintain the present profit of the company in case the price is reduced. b
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