Question

HASF Glassworks makes glass flanges for scientific use Material cost Rs.10 per flange and the glass blowers are paid a wage rate of 100 per hours a glass blower blows 20 flanges in two hours. Fixed manufacturing costs for flanges are 25000 per period. other non-manufacturing cost associated with flanges are 10,000 per period and are fixed.

Required:

1. Find out variable cost per units and total fixed cost.                                      (02 marks)
2. Assume Company manufactures and sells 10,000 flanges this period their competitor sells flanges for 15 each. can company sell below competitor price and make a profit on the flanges                                                                                                        (01 marks)
3. How would be your answer to requirement 2 differ if company made and sold 20,000 flanges this period why                                                                                   (01 marks)

Answer 1

2 a Varlable cost per unit? material cost per flang Wages par flang Z100x 2 Hrs 20 flongs I 20 2 3sovo Holal feed cost fixed manufactoring lost t other non manufactoring cost 2500ot lo coo b) Total cost per Hangs - Variable cost per unit X10,60 + fixed cost -£20x10800 +35ood per flangs No. The company can't sell Hlenge tehow < 23.5 to - 223 Scoo cost 2 235ooo 10oOD make profit flang () per unit Lost 20x20,000 +35000 -21.75 gooo Is the production cost is still above the selling friske the answer remains same