A factory's normal capacity is 1,20,000 units per annum. The estimated costs of production are as...

 

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A factory's normal capacity is 1,20,000 units per annum. The estimated costs of production are as under :- Direct material Rs. 3 per unit; Direct labour Rs. 2 per unit (Subject to a minimum of Rs. 12,000 p.m.) Indirect expenses-Fixed Rs. 1,60,000 per annum; Variable Rs. 2 per unit; semi-variable Rs. 60,000 upto 50% capacity and an additional Rs. 20,000 for every 20% increase in capacity or any part thereof. Each unit of raw material yields scrap which is sold at the rate of 20 paise per unit. In 1978. the factory worked at 50% capacity for the first three months but it was expected that it would work @ 80% capacity for the remaining 9 months. During the first three months, the selling price per unit was Rs. 12. What should be the price in the remaining nine months tc produce a total profit of Rs. 2,18,000 ? A factory's normal capacity is 1,20,000 units per annum. The estimated costs of production are as under :- Direct material Rs. 3 per unit; Direct labour Rs. 2 per unit (Subject to a minimum of Rs. 12,000 p.m.) Indirect expenses-Fixed Rs. 1,60,000 per annum; Variable Rs. 2 per unit; semi-variable Rs. 60,000 upto 50% capacity and an additional Rs. 20,000 for every 20% increase in capacity or any part thereof. Each unit of raw material yields scrap which is sold at the rate of 20 paise per unit. In 1978. the factory worked at 50% capacity for the first three months but it was expected that it would work @ 80% capacity for the remaining 9 months. During the first three months, the selling price per unit was Rs. 12. What should be the price in the remaining nine months tc produce a total profit of Rs. 2,18,000 ?

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Solution COST SHEET FOR THE YEAR 1978 First 3 Remainin... View the full answer