Juneja Ltd. manufactures readymade garments and uses its cutpieoes of cloth to manufacture dolls. The following statement of cost has been prepared:

Readymade Dolls Total

Garments

Material 1,60,000 12,000 1,72,000

Labour 26,000 2,4000 28,400

Variable Overheads 34,000 5,600 39,600

Fixed Overheads 48,000 6,000 54,600

Total Cost 2,68,000 26,000 2,94,000

Sales 3,40,000 24,000 3,64,000

Profit (+0 Loss (-) + 72,000 -2,000 + 70,000

Cutpieces used in the manufacture of dolls have a scrap value of Sh.4,000, if sold in the market. As there is loss of Sh.2,000 in the manufacturing of dolls, it is suggested to discontinue its manufacture.