Is the offer of the foreign market accepted by utlizing the spare capacity?

A company is operating at 50% capacity producing 2,000 units of output which are totally sold in the domestic market at a price of Rs. 100 per unit. The cost per unit of the product is given as follows:

Rs. Per Unit

Direct Materials

30

Direct Wages

20

Manufacturing Overheads (20% fixed)

10

Administration Overheads (100% fixed)

8

Selling and Distribution Overheads (50% variable)

12

Total cost

80

The company receives an order from the foreign market for 2000 units at a price of Rs. 80 per unit. The additional distribution cost for export is estimated at Rs. 2 per unit.

Is the offer of the foreign market accepted by utlizing the spare capacity?

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *