Question Number: #Com6501

Answer the question based on the information given below: The following table shows the break-up of actual costs incurred by a company in last five years (year 2002 to year 2006) to produce a particular product:

 

Year 2002

Year 2003

Year 2004

Year 2005

Year 2006

Volume of production and sale (units)

1000

900

1100

1200

1200

Costs (Rs.)

 

 

 

 

 

Material

50,000

45,100

55,200

59,900

60,000

Labour

20,000

18,000

22,100

24,150

24,000

Consumables

2,000

2,200

1,800

1,600

1,400

Rent of building

1,000

1,000

1,100

1,100

1,200

Rates and taxes

400

400

400

400

400

Repair and maintenance expenses

800

820

780

790

800

Operating cost of machines

30,000

27,000

33,500

36,020

36,000

Selling and marketing expenses

5,750

5,800

5,800

5,750

5,800

 

The production capacity of the company is 2000 units. The selling price for the year 2006 was Rs. 125 per unit. Some costs change almost in direct proportion to the change in volume of production, while others do not follow any obvious pattern of change with respect to the volume of production and hence are considered fixed. Using the information provided for the year 2006 as the basis for projecting the figures for the year 2007, answer the following questions:

Question: Given that the company cannot sell more than 1700 units, and it will have to reduce the price by Rs.5 for all units, if it wants to sell more than 1400 units, what is the maximum profit, in rupees, that the company can earn?


Options:
A.) 25400
B.) 24400
C.) 31400
D.) 32900


Answer is option : A

Solution:

Your Solution here


Question Related Topics:
Data Interpretation & Logical Reasoning
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