A company has a capacity of producing 50,000 units of a certain product in a month. The sales department reports that the following sales prices are possible:
| Volume of Sales Don't use plagiarized sources. Get Your Custom Essay on at which level of production and sales will the profit be the maximum 609613 Get an essay WRITTEN FOR YOU, Plagiarism free, and by an EXPERT! Just from $10/Page | Selling Price / Unit Rs. |
| 50% of production capacity | 2.00 |
| 60% | 1.90 |
| 70% | 1.85 |
| 80% | 1.80 |
| 90% | 1.70 |
| 100% | 1.60 |
The variable cost of manufacture between the above levels and the total amount of fixed cost (for 60% capacity) is Rs. 20,000 per month.
You are required to prepare a statement showing the incremental revenue and the differential cost at each of the above levels of production and sales.
At which level of production and sales will the profit be the maximum.
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