Find below data given for a business showing losses/costs incurred at different levels of operations and...
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Find below data given for a business showing losses/costs incurred at different levels of operations and if the firm decides to shut down operations. Particulars Sales Revenue @ Rs 3 Variable Cost @ Rs 2 Contribution Fixed Costs Profit/(Loss) Shutdown costs 2,000 Units produced 1,000 units 3,000 1,000 2,000 3,000 units units 2,000 4,000 6,000 5,000 4,000 units 6,000 9,000 12,000 8,000 5,000 units 15,000 (2,000) (4,000) (3,000) (2,000) (1,000) 10,000 2,000 3,000 4,000 5,000 5,000 5,000 5,000 5,000 The production manager and finance manager are deliberating on deciding about at what output level would it be appropriate to shut-down the factory rather than continue operations? You need to help them take this decision by justifying your reasons for the same. (Mention the numerical results for your explanation). Do you think a shut down decision is purely a financial one? What other qualitative factors need to be considered while deciding on whether to continue or shut-down operations. Find below data given for a business showing losses/costs incurred at different levels of operations and if the firm decides to shut down operations. Particulars Sales Revenue @ Rs 3 Variable Cost @ Rs 2 Contribution Fixed Costs Profit/(Loss) Shutdown costs 2,000 Units produced 1,000 units 3,000 1,000 2,000 3,000 units units 2,000 4,000 6,000 5,000 4,000 units 6,000 9,000 12,000 8,000 5,000 units 15,000 (2,000) (4,000) (3,000) (2,000) (1,000) 10,000 2,000 3,000 4,000 5,000 5,000 5,000 5,000 5,000 The production manager and finance manager are deliberating on deciding about at what output level would it be appropriate to shut-down the factory rather than continue operations? You need to help them take this decision by justifying your reasons for the same. (Mention the numerical results for your explanation). Do you think a shut down decision is purely a financial one? What other qualitative factors need to be considered while deciding on whether to continue or shut-down operations.
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To determine the appropriate output level for shutting down the factory we need to analyze the po... View the full answer
Related Book For
Auditing The Art And Science Of Assurance Engagements
ISBN: 9780136692089
15th Canadian Edition
Authors: Alvin A. Arens, Randal J. Elder, Mark S. Beasley, Chris E. Hogan, Joanne C. Jones
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