A factory can produce 60,000 units per annum at its optimum (100%) capacity. The estimated cost of production are as follows: Direct material Rs. 3 per unit Direct labour Rs. 2 per unit Indirect expenses: Fixed Rs. 1,50,000 per annum Variable Rs. 5 per unit Semi variable Rs. 50.000 per annum up to 50% capacity and an extra expense of Rs. 10,000 for every 25% increase in capacity or part thereof. The factory produces only against orders (and not for own stock). If the production program of the factory is as indicated below and the management desires to ensure a profit of Rs. 1,00,000 for the year, work out the average selling price at which each unit should be quoted. First 3 months of the year: 50% capacity, remaining 9 months B0% of capacity. Ignore selling and distribution and administrative overheads.
A factory can produce 60,000 units per annum at its optimum (100%) capacity. The estimated cost of production are as follows: Direct material Rs. 3 per unit Direct labour Rs. 2 per unit Indirect expenses: Fixed Rs. 1,50,000 per annum Variable Rs. 5 per unit Semi variable Rs. 50.000 per annum up to 50% capacity and an extra expense of Rs. 10,000 for every 25% increase in capacity or part thereof. The factory produces only against orders (and not for own stock). If the production program of the factory is as indicated below and the management desires to ensure a profit of Rs. 1,00,000 for the year, work out the average selling price at which each unit should be quoted. First 3 months of the year: 50% capacity, remaining 9 months B0% of capacity. Ignore selling and distribution and administrative overheads.
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:A factory can produce 60,000 units per annum at its optimum (100%) capacity. The estimated cost of
production are as follows:
Direct material
Rs. 3 per unit
Direct labour
Rs. 2 per unit
Indirect expenses:
Fixed
Rs. 1,50,000 per annum
Variable
Rs. 5 per unit
Semi variable
Rs. 50,000 per annum up to 50% capacity and an extra expense of Rs. 10,000
for every 25% increase in capacity or part thereof.
The factory produces only against orders (and not for own stock),
If the production program of the factory is as indicated below and the management desires to ensure a profit of
Rs. 1,00,000 for the year, work out the average selling price at which each unit should be quoted.
First 3 months of the year: 50% capacity, remaining 9 months 80% of capacity,
Ignore selling and distribution and administrative overheads.
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