Products

Particulars A B C D E Total

RM Cost 10 12 14 16 18

Labour 2 2 2 1 4
Consumables 1 1 1 1 0
Power & Fuel 1 1 2 3 0

Direct Cost + RMC 14 16 19 21 22

Selling Price 20 18 22 24 28

Contribution per unit 6 2 3 3 6 20

Indirect cost allocation 4 2 2 4 3 15

Profit per unit 2 0 1 -1 3 5

Should it stop Manufacturing Product D ?

What if unit increases overall production by 10% without increasing overheads

What if unit receives an inquiry for 1000 units of product D by

reducing its price by Re 1

What if unit receives offer for supply of Product A at 15

What if unit receives offer for supply of Product A at 13

Presumption
Unit has enough capacity
Unit has enough working capital
Unit has marketability for each product
Variable costs are fully variable
Indirect costs are absolutely fixed
 Products
Particulars A B C D E Total

RM Cost 10 12 14 16 18

Labour 2 2 2 1 4
Consumables 1 1 1 1 0
Power & Fuel 1 1 2 3 0

Direct Cost + RMC 14 16 19 21 22

Selling Price 13 15 18 19 20

Contribution per unit -1 -1 -1 -2 -2 -7

Indirect cost allocation 4 2 2 4 3 15

Profit per unit -5 -3 -3 -6 -5 -22

1 Should the unit continue to manufacture

2 What if unit gets offer from vendors to supply goods at a
rate which is less than RMC+VC