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 in relation to kurt lewin''s model of planned change, Question: ...

Question: (a) Change has become an inevitable feature of organisational life in today's competitive business world. Change can manifest itself in two forms. It can either simpl

What is customer relationship management, (a) What is customer relationship...

(a) What is customer relationship management? (b) What are the three main elements to consider when aligning your business towards a customer relationship format? (c) What a

Quality management plan, Q uality management plan The quality manageme...

Q uality management plan The quality management plan is to give guidance on how the quality can be checked on the project through the design reviews, the documentation, and th

Important qualities of a professional screenwriter, Question 1 Explain ...

Question 1 Explain the ten most important qualities of a professional screenwriter and describe why you consider these skills to be important. Question 2 (a) Name and

Purpose and function of library classification, Purpose and Function of lib...

Purpose and Function of library classification: We have so far studied the meaning of classification. We also have studied the importance of a call number We would now do well

Beta of a share, Beta of a share Financial analysts often talk of the ...

Beta of a share Financial analysts often talk of the beta (b) of a share. We will describe what the beta signifies and the method commonly used to estimate it in this section.

Solid waste management, The solid wastes from a summer camp with 100 childr...

The solid wastes from a summer camp with 100 children and a staff of 25 are to be collected once per week. If bottles and cans (representing 20% of the weight) are removed, paper

Performing quality control, P e rforming Quality Control Quality cont...

P e rforming Quality Control Quality control uses techniques and performs activities to compare actual quality performance with requirements and define appropriate actions if

Advantages and limitations - experimental research, Advantages and Limitati...

Advantages and Limitations: Experimental  approach represents the most  powerful method for  testing hypothesis of  the  cause and  effect relationship between variable. Becau

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