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

Information transfer processes, Information Transfer Processes: This s...

Information Transfer Processes: This section is intended to take note of (a) the information transfer process among the users of information on the subject; (b) the informatio

Literature search services , Literature Search Services: Literature se...

Literature Search Services: Literature search service is considered as an extension of reference service. An important aspect of literature search service is ascertaining the

Pre-requisites for a union catalogue, Pre-requisites for a Union Catalogue ...

Pre-requisites for a Union Catalogue   Compilation of a union catalogue is possible only through library cooperation. Any such compilation should be very clear in the beginning

Methods of stock verification , Methods Following is a brief descrip...

Methods Following is a brief description of the prevalent methods of stock taking.  Stock Verification by Accession Numbers:  The  accession numbers of the books from t

Discuss why systems are vulnerable, Question 1 Explain the role of informa...

Question 1 Explain the role of information in decision making Question 2 Explain how businesses can gain competitive advantage from managing information Question 3 Expla

Different types of hospitality offering businesses, Question 1: (a) Sho...

Question 1: (a) Show what is meant by the managerial environment? Illustrate your answer with specific examples using both internal and external environmental influences within

Administration of interview schedule, Administration of Interview Schedule:...

Administration of Interview Schedule: Rules for  Interviewing  Fix-up the Appointment:  Interviewer should  fix up  the data and time  of interview with  the  subjecthn

Allocating funds - library management system, Allocating Funds: Financ...

Allocating Funds: Finance is the most important factor in document selection. Proper planning of finance is basic to good  acquisition  work. Every library works according to

#DEMAND FORECASTINGtitle.., Impact of demand forecasting on supply chain ma...

Impact of demand forecasting on supply chain management

Rules of thumb for a competitive negotiation, Rules of thumb for a competit...

Rules of thumb for a competitive negotiation:    Stick to your planned target and walk away points.    You are likely to get a better overall deal if you make a larger nu

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