A company manufactures three products, and their respective details are furnished as follows:
|
X |
Y |
Z |
|
|
Capacity engaged |
20% |
40% |
40% |
|
Units produced |
2,000 |
5,000 |
6,000 |
|
Cost per unit |
Rs 20 |
Rs 32 |
Rs 36 |
|
Wages |
Rs 10 |
Rs 12 |
Rs 16 |
|
Variable overheads |
Rs 7 |
Rs 9 |
Rs 11 |
|
Fixed overheads |
Rs 20 |
Rs 19 |
Rs 20 |
|
Rs 57 |
Rs 72 |
Rs 83 |
|
|
Selling price per unit |
Rs 57 |
Rs 77 |
Rs 87 |
|
Profit or loss |
Rs 1 |
Rs 5 |
Rs 4 |
The management proposes to discontinue line X. It intends to utilize the disengaged capacity in the lines Y and Z equally. Advise the management suitably.