Problem 5 A Ltd co. Has capacity to produce 1,00,000 units of a product every...
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Problem 5 A Ltd co. Has capacity to produce 1,00,000 units of a product every month. It's works cost at varying levels of production is an under Lavel 10% Works cost per unit $ 400 390 380 20% 30% 40% 370 360 50% 350 60% 70% 80% 340 330 90% 100% 320 310 Its fixed administration expenses amount to $1,50,000 and fixed marketing expenses amount to $2,50,000 per month, respectively. The variable distribution cost amounts to $30 per unit. It can market 100% of its output at $500 per unit provided it incurs the following further expenditure: (a) it given gift items costing $30 per unit of sale; (b) it has lucky draws every month giving the first prize of $50,000; 2nd prize of $25,000, 3rd prize of $10,000 and three consolation prizes of $5,000 each to customers buying the product. (C) it spends $1,00,000 on refreshments served every month to its customers; d) it sponsors a television programme every week at a cost of $20,00,000 per month. It can market 30% of its output at $550 per unit without incurring any of the expenses referred to in (a) to (d) above. Advise the company on its course of action. Show the supporting cost sheets
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