Question
How to calculate the annual Profit based on the following Weekly production with the following unit costs OUTPUT VC FC SP Product A 100,000 .75
How to calculate the annual Profit based on the following Weekly production with the following unit costs
OUTPUT VC FC SP
Product A 100,000 .75 .24 2.00
Product B 50,000 .30 .17 1.00
Prodcuct C 125000 1.10 .25 1.70
Sales Volume is equal to production volume and a 3 week allowance for holidays with no production
The rates of absorption of fixed costs based on Current levels of output with similar cost structure .
i wish to MANUFACTURE product D
To Market product D Costs required 250,000
machine for product A will need to be modified - cost 80,000
additional annual Fixed costs also of 45000
VC of Prodcut D .60 CENTS PER UNIT
Demand survey suggests the following for Product D
sp 1.70 weekly demand 55000
sp 1.40 weekly demand 80000
sp 1.15 weekly demand 120,000
to producer product D
REDUCTION OF PRODUCT A BY 25 % PA
OR
REDUCTION OF PRODUCT C BY 28% PA
THIS IS TO FACILITATE MACHINE TIME FOR PRODUCT D
Product D must cover any loss of profit casused by reduction in volume
require the contributions that the various alternative sales levels of atomisers might make
In relation to this question Above ..
When there is a reduction in production in either "A" OR "C" .... does the Fixed Costs remain the same ... eventhough there is a reduction ... eg Prodcuct a has A FC per unit of .24 ... this equates to a FC OF 24,000 PER WEEK.... IF Product A is reduced by 25% to facilitate time for Product D's introduction... does the fc of 24,000 remain or reduced the same % as the VC ...for production of product A ... i ask as i understand that FC always remain no matter what production takes place .. egproduction managers salary is still the same no matter how many units are produced ... just need clarification ?
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