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

What motivates companies to indulge in major merging, QUESTION 1 What m...

QUESTION 1 What motivates companies to indulge in major merging or taking-over endeavours as a strategy to increase output and revenue? QUESTION 2 Short-, medium-, and

Treasury management, Treasury Management explain the objective of treasury ...

Treasury Management explain the objective of treasury management as "the management of an organisation's cash flow, its borrowings and its investments, in such a way as to contro

Define a safety and health at work policy, QUESTION 1 (a) State 5 crite...

QUESTION 1 (a) State 5 criteria which should be taken into consideration when planning a safe place of work. (b) Briefly describe them. QUESTION 2 (a) Define a safe

Questioning and interview schedule, Questioning and Interview Schedule: ...

Questioning and Interview Schedule: Meaning: The questioning is  a technique of data collection where  the sources  of data  is  the subject himself/herself.  Here, the data a

Library building-library management, LIBRARY BUILDING Libraries come i...

LIBRARY BUILDING Libraries come in various types and  sizes  to fulfill certain specific needs of the community it is established to serve. Thus we  can have a single room vil

Communities of practice - differ and structure, Communities of Practice Dif...

Communities of Practice Differ and Structure Though a neighbourhood is called a community, not every community is called Community of Practice. Similarly, not everything which

Debt management policy, ‘The overall objective of debt management is to min...

‘The overall objective of debt management is to minimise the cost of borrowing to the organisation.' Required: I. Explain factors which need to be taken into account, other t

History of quality management, H i story of quality management Earlie...

H i story of quality management Earlier limited products were made by skilled craftsmen who inspected and took pride in their work before selling it to their customer. Crafts

Measure the effectiveness of the campaign, Question: The central Bank o...

Question: The central Bank of Utopia in the tiny kingdom of Bawana, near South Africa (pop 1.6 million) has decided to replace the twenty-five and fifty pesos notes by coins o

Main activities during the construction of the factory, Question 1: Rea...

Question 1: Read the following and answer the questions below. You are the Health and Safety Officer of a big industrial group which is constructing a new factory in which o

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