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

Briefly discuss the motivations behind this trend, QUESTION 1 (i) Discu...

QUESTION 1 (i) Discuss the key activities of the strategic management process'. Explain why it is important for managers to recognise the interdependent nature of these activit

Early stage - evolution of catalogue, Early Stage - Evolution of catalogue ...

Early Stage - Evolution of catalogue - library catalogue code: Some such methods though primitive, existed almost until the time the manuscripts came to end and ceased to be t

Quality improvement, Q uality improvement Quality improvement can be d...

Q uality improvement Quality improvement can be defined as the organised creation of the beneficial change along with the attainment of unprecedented levels of the performance

Current awareness services, Current Awareness Services: Current awaren...

Current Awareness Services: Current awareness services are designed to keep the user abreast of information in thier area of work or interest that has recently been published

Gilding and hollow backs - binding processes, Gilding:   Gilding or co...

Gilding:   Gilding or colouring edges may be done either at the time of trimming the edges or after cutting the boards. The purpose of gilding or colouring is primarily or prot

Define the concept of bilateral tourism, Question: In recent decades, t...

Question: In recent decades, tourism has emerged as one of a small group of service industries that increasingly dominate the global economy. However, the structure and sig

Event management problem, In the early October, Gaetan Ah Kong, the owner o...

In the early October, Gaetan Ah Kong, the owner of Chez Gaetan catering company, came into the service manager's office beaming. "We got the MUT party", he said enthusiastically wh

Contract close-out, C ontract  close-out:   Contract  close-out  be...

C ontract  close-out:   Contract  close-out  begins  with  checking  for physical completion, i.e., whether all services have been performed and products delivered. Closeout

Purchase and buy decision , Purchase and Buy Decision  The project mana...

Purchase and Buy Decision  The project manager or the production manager of a project has to decide whether to buy or make a part, so that it is available at the right schedule

Physical processing work - procedures, Physical Processing Work: Cutt...

Physical Processing Work: Cutting : It is often found that books are received with partially uncut sections. If these are left unnoticed, readers may carelessly open up the p

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