Nubo manufacturing company annually manufactures 10,000 units of a product at a cost of Rs. 4 per unit and there is a home market for consuming the entire volume of production at a sale price of Rs. 4.25 p. u. In the year 2002, there is a fall in the demand for home market which can consume 10,000 units only at a sale price of Rs. 3.72 p. u. The analysis of cost per 10,000 units is – Materials - Rs. 15,000, Wages - Rs. 11,000, Fixed overheads - Rs. 8000, Variable overheads - Rs. 6000. The foreign market is explored, and it is found that this market can consume 20,000 units of the product if offered at sale price of Rs. 3.55 per unit. It is also discovered that for additional 10,000 units of the product (over initial 10,000 units) the fixed overheads will increase by 10%. Is it worthwhile to try and capture the foreign market
Nubo manufacturing company annually manufactures 10,000 units of a product at a cost of Rs. 4 per unit and there is a home market for consuming the entire volume of production at a sale price of Rs. 4.25 p. u. In the year 2002, there is a fall in the demand for home market which can consume 10,000 units only at a sale price of Rs. 3.72 p. u. The analysis of cost per 10,000 units is – Materials - Rs. 15,000, Wages - Rs. 11,000, Fixed
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