# A company annually manufactures 10000 units of a product at a cost of 4 per unit and

## Question:

A company annually manufactures 10000 units of a product at a cost of 4 per unit and there is home market for consuming the entire volume of production at the sale price of 4.25 per unit. In the year 2002, there is a fall in the demand for home market which can consume 10000 units only at a sale price of Rs. 3.72 per unit. The analysis of cost per 10000 units is:

The foreign market is explored and it is found that this market can consume 20000 units of the product if offered at sale price of 3.55 per unit. It is also discovered that for additional 10000 units of the product (over initial 10000 units) the fixed overheads will increase by 10 per cent. Is it worthwhile to try to capture the foreign market?

## Step by Step Answer:

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