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A company has capacity of producing 1,00,000 units of a certain product in a month....

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Accounting

A company has capacity of producing 1,00,000 units of a certain product in a month. The sales department reports that the following scheduling of selling price is possible:

Volume of Production Selling Price Per Unit

60% 0.90

70% 0.80

80% 0.75

90% 0.67

100% 0.61

The variable costs of manufacture between these levels are Sh.0.15 per unit and fixed costs Sh.40,000.

Required: Find out at what volume (level) of production will the profit be maximum?

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