Exel ltd has two departments X and L. department X produces component parts while department L produces finished goods. Component part p manufactured by X is used in the finished product. The cost structure of xp component is as under (based on a normal capacity of 100,000 units of the part p.a.): Shs Direct materials 30 Direct labour 6 Manufacturing overheads Variable Fixed Total g60 Selling and administration overheads Variable (per unit) shs 3 Fixed (total) Shs 400,000 Presently, the part xp is being sold by department X in the markets at a price of Shs 65, though the market price varies between 65 and Shs 66. The normal capacity is 100,000 parts per year but the forthcoming year the company is Page 3