wrong = 5 down votes

Sales 40 10 Factory Closure and Transfer to another Factory Manufacturing Company has three factories namely Factory * , Factory B. Factory C. etes perto the same product which are sold at 750 per unit. The factory wise estimates of Operation Results out as follows: Particulars Factory A Factory Fadory 500 2459 200 osts: Raw Materials 150 709 Direct Labour 150 560 Factory Overheads-Variable 220 Factory Overheads-Fixed 80 249 LO Selling Overheads-Variable 46 30 256 Selling Overheads-Fixed 30 50 Administrative Overheads 40 180 Head Office Expenses 24 100 184 PROFIT 40 160 320 then the above estimates were under finalization, the Company's Legal Department advised that the lease of Tractory s due to expire on 31 December 2019, and that it could be renewed by enhancing the lease Rent by 324 Las pezzano Since this enhancement will have impact on the profitability of the Company, the Management is constrained to examine following proposals: 0 Renew the lease and bear the impact. 1) Close down Factory 'A', sell off the Plant, Machinery and Stock, and liquidate all Liabilities including the Star and Workers', pay Retrenchment Compensation from Sale Proceeds which are sufficient for the purpose. In order however to maintain the customer relations, the total planned output of the Factory 'A' will be transferred EITHER actory 'B' OR Factory 'C'. Plant Capacity is available at both the factories to take over the manufacture. The additional cost involved in the manufacture of the extra output so transferred in Factory 'B' and Care estimated as under. Factory B Factory a) Additional Fixed Overheads due to increase in capacity utilization (per annum) 3100 Lakhs 380 Lakhs (b) Additional Freight, Selling and Other Overheads to produce and distribute the output 350 per unit 370 per unit to the present customers of Factory 'A' Prepare comparative statements of profitability in the aforesaid alternative courses of action and give your recommendations. von Estimates Lakhs)