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Namib Cola-cola Cc produces a product called Cola-cola and is sold by Division B at a price of N$130 per unit on a perfectly competitive
Namib Cola-cola Cc produces a product called Cola-cola and is sold by Division B at a price of N$130 per unit on a perfectly competitive market. The product is processed in Division A, then transferred to Division B where it is completed and sold. Division A's monthly manufacturing costs are as follows: Volume (units) Volume (units) Volume (units) 0-100 units 101 -300 units 301 - 600 units Variable cost per N$25 N$25 N$30 unit Fixed cost N$3 500 Volume (units) Volume (units) Volume (units) 0-100 units 101 -300 units 301 - 600 units N$25 N$25 N$30 Variable cost per unit Fixed cost N$3 500 Opportunity cost N$50 N$80 Variable costs increase due to overtime. Opportunity cost relates to losses of contribution from not producing other products. The fixed costs of N$3 500 relates to any production above 100 units. Division A cannot produce above 600 units. Division B's manufacturing costs: Division B would have to invest N$8000 monthly on fixed equipment. The variable cost to complete each unit of production is N$15. NB: Assume the fixed costs are semi-variable. Calculate the profit maximisation strategy total amount that is in the best interest of the company, if they sell 100,300 and 600 units. Namib Cola-cola Cc produces a product called Cola-cola and is sold by Division B at a price of N$130 per unit on a perfectly competitive market. The product is processed in Division A, then transferred to Division B where it is completed and sold. Division A's monthly manufacturing costs are as follows: Volume (units) Volume (units) Volume (units) 0-100 units 101 -300 units 301 - 600 units Variable cost per N$25 N$25 N$30 unit Fixed cost N$3 500 Volume (units) Volume (units) Volume (units) 0-100 units 101 -300 units 301 - 600 units N$25 N$25 N$30 Variable cost per unit Fixed cost N$3 500 Opportunity cost N$50 N$80 Variable costs increase due to overtime. Opportunity cost relates to losses of contribution from not producing other products. The fixed costs of N$3 500 relates to any production above 100 units. Division A cannot produce above 600 units. Division B's manufacturing costs: Division B would have to invest N$8000 monthly on fixed equipment. The variable cost to complete each unit of production is N$15. NB: Assume the fixed costs are semi-variable. Calculate the profit maximisation strategy total amount that is in the best interest of the company, if they sell 100,300 and 600 units
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