Q2. International Brands Ltd. Is operating at 60% capacity and producing 2,700 pieces of product A. The cost of production for the month of August 2012 was: Rs. Direct Material 54,000 Direct wages 8,100 Variable Overheads 9,900 Fixed Overheads 18,000

The products are currently sold at an average price of Rs. 72.

A tender for supply of 900 pieces per month has been received. To submit tender the following information has been ascertained.

Variable Overheads attributable to various activity level is:

% Per month Rs. 50 8,280 60 9,900 70 11,520 80 13,500 90 15,300 100 16,920

Required: (Mark 5)

(a) Calculate the bidding price which will yield a 10% profit. (b) Prepare a statement showing the effect on the monthly profit if the companys tender is accepted.