29 Nov A company is operating at 50% capacity producing 2
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 80The 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?