Question 01: A Company working at 50% capacity manufactures 10,000 units of a pr
ID: 2551724 • Letter: Q
Question
Question 01: A Company working at 50% capacity manufactures 10,000 units of a product. At 50% capacity, the product cost is Dh. 180 and sale price is Dh. 200. The breakup of the cost is as below.
Cost per unit
Material Dh. 100
Wages Dh. 30
Factory Dh. 30 (40% fixed)
Administration overheads Dh 20 (50% fixed)
At 60% working, raw material cost goes up by 2% and sales price falls by 2%. At 80% working, the raw material cost increases and sale price decreases by 5% respectively. Prepare a statement to show profitability at 60% and 80% capacity.
Explanation / Answer
Solution:-
Particulars 60% Capacity 80% Capacity Units 12000 units 16000 units Material Cost (100*102%)*12000 = 1224000 (100*105%)*16000 = 1680000 Wages (12000*30) = 360000 (16000*30) = 480000 Factory Exp:- Variable (18*12000) = 216000 (18*16000) = 288000 Fixed (12*10000) = 120000 (12*10000) = 120000 Administration Exp:- Variable (10*12000) = 120000 (10*16000) = 160000 Fixed (10*10000) = 100000 100000 Total Cost 2140000 2828000