Question
ABC Ltd makes three products and reviewing the profitability of its product line. You are given following budgeted data about firm for coming Year. Products
ABC Ltd makes three products and reviewing the profitability of its product line. You are given following budgeted data about firm for coming Year.
Products F1 F2 F3
Sales (in Units 000) 120 100 80
Revenue (RS. in 0000) 144 150 88
Costs: Rs.)
Material 480,000 500,000 240,000
Labor 320,000 400,000 160,000
Overheads 600,000 650,000 360,000
14000,000 1550,000 760,000
Profit / (Loss) 40,000 (50,000) 120,000
The company is concerned about the loss on products F2. It is considering ceasing production of it and switching the spare capacity of 100,000 units to product F3.
You are told:
Required:
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