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

Mr. Vincet case study, 1.Critically analyze Mr. Vincent’s reasoning. 2. If ...

1.Critically analyze Mr. Vincent’s reasoning. 2. If you were the professor and you knew what was going through Vincent’s mind, what would you say to Vincent

Develop a process map, Question Assume a large manufacturing company im...

Question Assume a large manufacturing company implemented both an ERP system and a Web ordering system. Develop a process map of the steps needed to fill a Web order. Be sure t

Trade discounts - library administration, Trade Discounts: Trade disco...

Trade Discounts: Trade discounts area common feature in book purchases. The discounts may vary according to categories of publications. Normally a 10% discount is admissible o

Six sigma - cynics view, Six Sigma - Cynics view The Six Sigma has take...

Six Sigma - Cynics view The Six Sigma has taken on the life of its own. The cynics might see it as "the next big thing" which will fade as soon as the new buzzword will come al

Working of enterprise project management within the model, Working of EPM w...

Working of EPM within the model The replica of the enterprise functions provides the foundation for implementing a rigorous move to selecting projects that have both strategic

Human resources development (hrd), HUMAN RESOURCES DEVELOPMENT (HRD) T...

HUMAN RESOURCES DEVELOPMENT (HRD) The effective participation and quality performance of human•beings in the various activities of an organisation result in an HRD process whi

The public service with special emphasis, QUESTION Awards for good perf...

QUESTION Awards for good performance are increasingly employed within the public service in many countries. These may or may not have a financial value. Performance-related pay

Levels of measurement, LEVELS OF MEASUREMENT: Measurement is the proce...

LEVELS OF MEASUREMENT: Measurement is the process  of assigning numbers  to  the variables. Ways  to assign these numbers include counting, ranking and comparing objects or ev

List and explain the risks, QUESTION a) Define risk as per the Public P...

QUESTION a) Define risk as per the Public Private Partnership Guidance Manual b) What are the primary objectives of transferring risks from a contracting authority to a priv

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