Answer:
Current Cost = Rs 360000
24000 units sold at rs 20 per unit
Turnover = 24000 * 20 = Rs 480000
Present Profit = 480000 - 360000 = Rs 120000
Profit per unit = 120000/24000 = 5 rs per unit
cost increased for increasing 3000 Production
Direct Material cost increase = (120000/24000) * 3000 = Rs 15000
Direct Labour cost increase = (84000/24000) * 3000 = Rs 10500
Variable overhead increase = (48000/24000) * 3000 = Rs 6000
Semi variable cost increased = Rs 1000
Cost Increased = 15000 + 10500 + 6000 + 1000 = 32500
Price per unit = Rs 14
Turnover from 3000 units = 14 * 3000 = Rs 42000
Proposed Profit from 3000 units = 42000 -32500 = Rs 9500
Proposed Profit per unit = 9500/3000 = Rs 3.17
Decision Depends upon management as Profit is there in a new market but per unit profit is lesser than current profit
Step-by-step explanation:
Got the answer from amitnrw
