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GreenTech Ltd. has a maximum production capacity of 50,000 units per month. The cost structure is as follows: Particulars Activity Level 30,000 units () 40,000
GreenTech Ltd. has a maximum production capacity of 50,000 units per month. The cost structure is as follows:
Particulars | Activity Level | 30,000 units (₹) | 40,000 units (₹) | 50,000 units (₹) |
Direct Material | 2,40,000 | 3,20,000 | 4,00,000 | |
Direct Labour | 3,00,000 | 4,00,000 | 5,00,000 | |
Total Factory Overheads | Fixed | 1,50,000 | 1,50,000 | 1,50,000 |
Total Factory Overheads | Variable | 50,000 | 1,00,000 | 1,50,000 |
Requirements:
- Calculate the total cost for each activity level.
- Determine the cost per unit for each activity level.
- Compute the selling price per unit at 50,000 units if the desired profit is 25% on sales.
- Analyze the effect on total cost if the fixed overheads increase by 10%.
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