A company is at present working at 90% of its capacity and producing 13,500 units per annum. It operates a flexible budgetary control system. Following figures are obtained from its budget : 100% $ 90% $ Sales Fixed expenses Semi-fixed expenses Variable expenses 15,00,000 3,00,500 97,500 1,45,000 13,500 16,00,000 3,00,500 1,00,500 1,49,500 15,000 Units made Labour and material cost per unit are constant under present conditions. Profit margin is 10 per cent. (a) You are required to determine the differential cost of producing 1,500 units by increasing capacity to 100 per cent. (b) What would you recommend for an export price for these 1,500 units taking into account that overseas prices are much lower than indigenous prices.

A company is at present working at 90% of its capacity and producing 13,500 units per annum. It operates a flexible budgetary control system. Following figures are obtained from its budget : 100% $ 90% $ Sales Fixed expenses Semi-fixed expenses Variable expenses 15,00,000 3,00,500 97,500 1,45,000 13,500 16,00,000 3,00,500 1,00,500 1,49,500 15,000 Units made Labour and material cost per unit are constant under present conditions. Profit margin is 10 per cent. (a) You are required to determine the differential cost of producing 1,500 units by increasing capacity to 100 per cent. (b) What would you recommend for an export price for these 1,500 units taking into account that overseas prices are much lower than indigenous prices.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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