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

Retirement planning case, We have completed the review of the elements in t...

We have completed the review of the elements in the retirement planning process. We will conclude Part I with a case assignment, which require students to apply what they have lear

Social structures as a management tool, S ocial structures as a management...

S ocial structures as a management tool An understanding of the type of social structure which can take the responsibility of nurturing the learning, developing the competenci

Building the team, QUESTION Leadership is essential for the success of ...

QUESTION Leadership is essential for the success of any organization (i) Briefly explain the need for leadership for a manager to be successful (ii) Briefly describe the

Documentation and information centres and databases , DOCUMENTATION AND INF...

DOCUMENTATION AND INFORMATION CENTRES AND DATABASES:   Traditionally, libraries have been collecting various kinds of publications and holding them in readiness for use by scho

Critically analyse the potential evils of bureaucratization, QUESTION 1 ...

QUESTION 1 Max Weber systematized the organization model of Bureaucracy (a) List and describe briefly the distinguishing features of bureaucracy (b) Critically analyse th

Advantages and disadvantages of e-mail marketing, QUESTION (a) Give fou...

QUESTION (a) Give four reasons why e-mail is considered one of the most powerful of all marketing tactics. (b) Strategic Planning is the first step in the execution of an e-

Discuss the relationship between treasury and alm, Question 1 ALM deals wi...

Question 1 ALM deals with strategic balance sheet management, which involves various risks, caused because of the changes in exchange rates and the position of liquidity, intere

Implementation of operations, Question 1 In the recent times, operations a...

Question 1 In the recent times, operations are considered from end to end of value chain which means the operations that start from sourcing of materials and other inputs to succe

Provide a checklist for a sustainable reform programme, Question 1: You...

Question 1: You are employed as a consultant to undertake a reform programme in a particular public sector environment. Provide a detailed checklist for a sustainable reform p

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