Company A is having the installed capacity to produce 10,000 units per month presently the company is producing only 6,000 units per month

Per unit

Total cost

100

600000

Cost of production

5 Material

6 Labour

7 Variable OH

8 Fixed OH

200

1200000

250

1500000

300

1800000

9

850

5100000

10

11 The company got an additional production order to produce 2,000 units per month 12 which will be supplied to the customer in other state for Rs650 pu 13 the present selling price of the product Rs1,000 per unit if the additional production is accepted, a special packing is required which costs Rs25

14 per unit