Question
A factory engaged in manufacturing plastic buckets is working to 40% capacity and produces 10, 000 buckets per annum. The present cost break up for
A factory engaged in manufacturing plastic buckets is working to 40% capacity and produces 10, 000 buckets per annum. The present cost break up for one bucket is as under,
Material Rs.10 Labour Rs.3
Overheads Rs.5 [60% fixed]
The selling price is Rs.20 per bucket.
If it is decided to work the factory at 50% capacity, the selling price falls by 3%. At 90% capacity, the selling price falls by 5% accompanied by a similar fall in the price of material.
You are required to calculate the profit at 50% and 90% capacities and also show break even points for the same capacity production.
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Management and Cost Accounting
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