Question: Problem 9.4 (B.E. Volume - Resultant profit due to increase in capacity). (a) What are the various ways in which marginal costing can help management?

Problem 9.4 (B.E. Volume - Resultant profit due to increase in

Problem 9.4 (B.E. Volume - Resultant profit due to increase in capacity). (a) What are the various ways in which marginal costing can help management? Under what circumstances prices can be fixed below marginal cost? (b) From the following figures find the break-even volume: Selling price per tonne Rs. 69.50 Variable cost per tonne Rs. 35,50 Fixed expenses Rs. 18.02 lakhs. If this volume represents 40% capacity, what is the additional profit for an added production of 40% capacity, the selling price of which is 10% lower for 20% capacity production and 15% lower than the existing price, for the other 20% capacity. (I.C.W.A. Inter, June 1988)

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