Reference no: EM133046773
Question - ABC factory produces 24,000 units. The cost sheet gives the following information:
Direct Materials Rs. 1,20,000
Direct Labour Rs. 84,000
Variable overheads Rs. 48,000
Semi variable overheads Rs. 28,000
Fixed overheads Rs. 80,000
Total Cost Rs. 3,60,000
Presently the product is sold at Rs. 20 per unit.
The management proposes to increase the production by 3,000 units for sales in the foreign market. It is estimated that semi variable overheads will increase by Rs. 1,000. But the product will be sold at Rs. 14 per unit in the foreign market. However, no additional capital expenditure will be incurred.
Required -
Q1. What is present profit of the company?
Q2. What is proposed profit of the company in new market?
Q3. What is a suggestion for new market proposal whether proposal accepts or not.
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