A company is at present working at 90% of its capacity and producing 13,500 units per annum. The following figures are obtained from its budget:
|
90% Rs. |
100% Rs. |
|
|
Sales |
7,50,000 |
8,00,000 |
|
Fixed expenses |
1,50,250 |
1,50,250 |
|
Semi-fixed expenses |
48,750 |
50,250 |
|
Variable expenses |
72,500 |
74,750 |
|
Units produced |
13,500 |
15,000 |
Labour and material cost per unit are constant under the present conditions.
- You are required to determine the differential cost of producing 1,500 units by increasing the capacity to 100%.
- What would you recommend for an expert price for these 1,500 units taking into account that the overseas prices are much lower than the domestic prices?