Due to fall in demand, of the above products, the company has a plan to diversify...

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Due to fall in demand, of the above products, the company has a plan to diversify and make product C using 40% capacity. It has been estimated that for C direct material and direct labour will be Rs.2.50 and Rs.3 per unit respectively. Other variable costs will be the same as applicable to the product A. The selling price of product C is Rs.14 per unit and production will be 30 000 units. Assuming 60% capacity is used for manufacture of A and B, calculate, I] Present cost and profit II] Cost and profit after diversification III]. Give your recommendations as to whether to diversify or not. Due to fall in demand, of the above products, the company has a plan to diversify and make product C using 40% capacity. It has been estimated that for C direct material and direct labour will be Rs.2.50 and Rs.3 per unit respectively. Other variable costs will be the same as applicable to the product A. The selling price of product C is Rs.14 per unit and production will be 30 000 units. Assuming 60% capacity is used for manufacture of A and B, calculate, I] Present cost and profit II] Cost and profit after diversification III]. Give your recommendations as to whether to diversify or not.