At normal level of operations, a company could make and sell 30,000 units at a price of
Fantastic news! We've Found the answer you've been seeking!
Question:
At normal level of operations, a company could make and sell 30,000 units at a price of sh. 30. The variable administrative and selling expenses are 0.75 cents per unit. The unit fixed cost is sh.4. Other costs per unit include: Material sh. 7 Labour sh. 4.30 Overheads sh. 3.50 The company is currently facing a serious challenge of competition and management are contemplating a shut down. Should they continue, they will be able to sell only 3,000 units. I the event the firm shuts down, it will still incur unavoidable costs of sh. 18,000.
Required:
a) Show whether or not the company should shut down
b) Compute the firm's shut down
Expert Answer:
Posted Date:
