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.22 (Quoting for an order-Desired minimum price). A small scale manufacturer produces an article at the operated capacity of 10,000 units while the normal capacity
.22 (Quoting for an order-Desired minimum price). A small scale manufacturer produces an article at the operated capacity of 10,000 units while the normal capacity of his plant is 14.000 units. Working at a profit margin of 20% on sales realization, he has formulated his Budget as under: 10,000 14.000 Sales Realization Rs. 2,00,000 Rs. 2,80.000 Variable overheads 50,000 70,000 Semi-variable overheads 20,000 22.000 Fixed overheads 40,000 40.000 He gets an order for a quantity equivalent to 20% of the operated capacity and even on this additional production, profit margin is desired at the same percentage on sales realization as for production to operated capacity. Assuming prime cost is constant per unit of production, what should be the minimum price to realise this objective
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