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 codes of ethics established by the wto, Question 1: Mention and...

Question 1: Mention and discuss three important codes of ethics established by the World Tourism Organisation regarding tourism development with respect to the facilities pr

Identify main characteristics of a successful event, Question : (a) Des...

Question : (a) Describe what you understand by the term ‘events'? Identify the main types and categories of events supporting your answer with examples. (b) (i) Identify

Subject approach - approach of readers for documents, Subject approach: I...

Subject approach: In academic, special, technical and research libraries, and to a large extent even in public libraries, you will find that the majority of readers approach docu

What do you understand by classical utilitarianism, QUESTION (a) What d...

QUESTION (a) What do you understand by classical utilitarianism? Explain its principles (b) How relevant do you think this concept is to our public and business organization

What do you understand by good governance, Question 1: i) What do you...

Question 1: i) What do you understand by good governance? ii) To what extent has good governance been implemented in the Mauritian Public Sector? Question 2: CSR h

Organisation of information services, ORGANISATION OF INFORMATION SERVICES:...

ORGANISATION OF INFORMATION SERVICES: Documentation and information services are activities that grew out of information needs of user communities engaged in research, industr

Importance of branding, Question: The branding strategy adopted by any ...

Question: The branding strategy adopted by any organization today is very important to be able to maintain or gain competitive edge over its competitors. (a) Define brandin

Why ethics is important in procurement, QUESTION 1 (i) Why ethics is im...

QUESTION 1 (i) Why ethics is important in procurement? (ii) How a public official involved in planning or conducting public procurement proceedings or contract administratio

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

Pest framework to analyse the business environment, QUESTION 1 Apply Po...

QUESTION 1 Apply Porter's Five Forces Model to UTM explaining how it can be used by the University to assess the attractiveness of the Tertiary Education Sector QUESTION 2

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