A factory engaged in manufacturing plastic buckets is working to 40% capacity and produces 10, 000 buckets per annum. The present cost break up for one bucket is as under,

Material Rs.10 Labour Rs.3

Overheads Rs.5 [60% fixed]

The selling price is Rs.20 per bucket.

If it is decided to work the factory at 50% capacity, the selling price falls by 3%. At 90% capacity, the selling price falls by 5% accompanied by a similar fall in the price of material.

You are required to calculate the profit at 50% and 90% capacities and also show break even points for the same capacity production.

Answer rating: 100% (QA)

Answer Solution Statement showing Profit and Break Even Point at 50 an... View the full answer