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

Internal and physical of the catalogue, Internal and Physical of the Catalo...

Internal and Physical of the Catalogue: Internal Form of the Catalogue  As mentioned earlier, according to the internal farm, the two major types of  library catalogues a

Follow-up after having received the treatment and got well, QUESTION Se...

QUESTION Service quality in the Health Sector can be defined as how the patient perceives the service dispensed by regional hospitals- a) before going to the hospital for tr

Caselet, whom do you think rajender will eat with? Why?

whom do you think rajender will eat with? Why?

Reasons for quality improvement, R easons for quality improvement The ...

R easons for quality improvement The Quality Improvement helps the organisation to continuously improve the quality of the product or the service. The quality improvement can

Explain the arbitrage pricing theory, QUESTION (a) Explain the Arbitrag...

QUESTION (a) Explain the Arbitrage Pricing Theory. In what ways the Arbitrage Pricing Theory is considered to be a superior model. What are its main limitations? (b) Disting

Need for literature search, Need for Literature Search: While the scie...

Need for Literature Search: While the scientific and technical literature has been growing exponentially, the amount of time that any user has for reading this literature rema

Explain e-compensation tools, In most modern organizations, the employment ...

In most modern organizations, the employment relationship has shifted from being life-long with career management provided by the organization into being more short-term with emplo

External environment in which organisations operate, Question 1: (a) Su...

Question 1: (a) Support systems are essential in the change process. What are the different levels at which support has to be initiated, developed and nurtured? (b) Why is

Internal and physical form of the catalogue, Internal Form of the Catalogue...

Internal Form of the Catalogue: As mentioned earlier, according to the internal farm, the two major types of  library catalogues are the Dictionary Catalogue and the Classifie

Advantages of machine readable catalogue, Advantages The machine-reada...

Advantages The machine-readable catalogue performs, all the functions of a library catalogue with greater efficiency and speed than any other form. We shall spell out theseadva

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