Question
ABC factory produces 24,000 units. The cost sheet gives the following information: Direct Materials Rs. 1,20,000 Direct Labour Rs. 84,000 Variable overheads Rs. 48,000 Semi
ABC factory produces 24,000 units. The cost sheet gives the following information: Direct Materials Rs. 1,20,000
Direct Labour Rs. 84,000
Variable overheads Rs. 48,000
Semi variable overheads Rs. 28,000
Fixed overheads Rs. 80,000
Total Cost Rs. 3,60,000
Presently the product is sold at Rs. 20 per unit.
The management proposes to increase the production by 3,000 units for sales in the foreign market. It is estimated that semi-variable overheads will increase by Rs. 1,000. But the product will be sold at Rs. 14 per unit in the foreign market. However, no additional capital expenditure will be incurred
Q-1. What is a present profit of the company?
Q-2. What is the proposed profit of the company in a new market?
Q-3.What is a suggestion for new market proposal whether proposal accept or not
Step by Step Solution
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Step: 1
To answer these questions we will calculate the present profit and then evaluate the proposed profit if production is increased for the new market Fin...
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College Accounting
Authors: Heintz and Parry
20th Edition
1285892070, 538489669, 9781111790301, 978-1285892078, 9780538489669, 1111790302, 978-0538745192
