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

Selection of sources, Selection of Sources: A good approach to literat...

Selection of Sources: A good approach to literature search is looking up a bibliography, an encyclopaedia or a review publication. This provides background information as also

Describe recruitment and hiring process, Question 1: Explain the import...

Question 1: Explain the important steps involved in assessing talent management process. Describe Talent management process steps involved in assessing talent manageme

Discuss the relevance of evaluation, Problem: Dressel (1986) defines ev...

Problem: Dressel (1986) defines evaluation as "the collection and interpretation, through systematic and formal means, of relevant information which serves the basis for ration

Checking with the catalogue - library classification, Checking with the cat...

Checking with the catalogue: The individual classifier  who is allotted a  set of documents for processing will first  check  each item in the set with the library catalogue.

Bill of materials , Bill of Materials  Bill of Materials (BOM) is an im...

Bill of Materials  Bill of Materials (BOM) is an important document for any project, production before launching or material requirement planning process.  The American Prod

Steps for direct contracting , Steps for direct contracting  Now that w...

Steps for direct contracting  Now that we are aware of the requirements for direct contracting, let us understand the steps involved in direct contracting:  1.  Invite short

Liqudation, describe the conditions for liquidation

describe the conditions for liquidation

Describe the types of business policies, Question 1 What do you mean by fa...

Question 1 What do you mean by family business? Explain the family business life cycle Question 2 Describe the types of business policies Question 3 List and expla

Outline kolb''s learning styles model, QUESTION Read the extract below ...

QUESTION Read the extract below and answer the questions that follow There is general consensus among educators that all learners are not the same. However, a single school

Methodology for the study of subjects, Until recently, information consolid...

Until recently, information consolidation products (ICP) were prepared by subject specialists themselves on the basis of the documents furnished by libraries and information center

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