Present level of production, Other Management

Assignment Help:

General Components Ltd produces a component ‘X', the selling price of which is Rs 50. The unit cost structure based on the present level of production/sales of 100 000 units is:

Direct materials           Rs 20
Direct labour               Rs 5
Variable Overhead      Rs 2
Fixed overhead           Rs 8

The present level of production represents 100% of capacity working a single shift. The marketing manager estimates that at the present price the quantity sold during the next year could be increased by 50%.

A second shift has been proposed. This would increase production capacity to 180 000 components per annum, fixed costs increasing by Rs 550,000 per annum. A shift work premium of 20% would be payable to the direct workers engaged on the additional shift. However, if production was at least 150 000 components per annum, the whole of the direct materials used would qualify for a discount of 10%.

Required:

Calculate whether it would be profitable for General Components Ltd to add the second shift.


Related Discussions:- Present level of production

Discuss the potential health risk, Question 1: (a) State three advanta...

Question 1: (a) State three advantages and three disadvantages of recycling. (b) Discuss the potential health risk which composting can pose to workers or to those located

Alphaetico - classed catalogue, ALPHAETICO - CLASSED CATALOGUE: The al...

ALPHAETICO - CLASSED CATALOGUE: The alphabetico-classed catalogue may be considered as a combination or mixture of the best points associated with dictionary and classified ca

Range of network services, The Range of Network Services   The range o...

The Range of Network Services   The range of services provided by many resource sharing networks include storage and retrieval of data such as factual, physical and bibliograp

Outline the organisational and behavioural factors, Question 1: Describ...

Question 1: Describe what is meant by ‘skilled-based', ‘rule-based' and knowledge-based behaviour. Explain in each case how these operating levels can give rise to human error

Semi-public documentation/information centres, Semi-public documentation/in...

Semi-public documentation/information centres: Established by learned or professional societies, trade associations industrial undertakings, etc., they exist primarily for ser

Management by objectives (mbo), Management by Objectives (MBO) Manageme...

Management by Objectives (MBO) Management technique is based on target-setting theory in which employees are given specific measurable goal to achieve. MBO has been shown to

Feasible for all organisations to adopt selection methods, QUESTION Ref...

QUESTION Refer to the table annexed which shows a summary the selection process at Toyota USA. This process lasts for about 20 hours and involves six phases spread over a span

Meaning of communication, Question 1 Communication is the lifeblood of...

Question 1 Communication is the lifeblood of a business organisation. Explain the role of communication in Business. What are the various barriers to communication? Meaning

Efficient market hypothesis, QUESTION (a) (i) Discuss the empirical evi...

QUESTION (a) (i) Discuss the empirical evidence in relation to weak form market efficiency (ii) Explain fully how you would conduct a test of semi-strong form of the Efficie

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd