International Brands Ltd. Is operating at 60% capacity and producing 2,700 pieces of product A. The cost of production for the month of August 2012 was:
Direct Material 54,000
Direct wages 8,100
Variable Overheads 9,900
Fixed Overheads 18,000
The products are currently sold at an average price of Rs. 72.
A tender for supply of 900 pieces per month has been received. To submit tender the following information has been ascertained.
• Variable Overheads attributable to various activity level is:
% Per month Rs.
(a) Calculate the bidding price which will yield a 10% profit.
(b) statement showing the effect on the monthly profit if the company’s tender is accepted.