The cost per unit of a product manufactured in a factory amounts to Rs 160 (75% variable) when the production is 10,000 units. When production increases by 25%, the cost of production will be Rs per unit.
A. Rs 145
B. Rs 150
C. Rs 152
D. Rs 140
Answer: Option C
Solution(By Examveda Team)
Cost p.u 16075%is variable cost 120p.u
40rs p.u fixed cost (fixed cost not change when production unit increase or decrease) fixed cost is
40 * 10000 = Rs. 400000
Cal cost p.u if production increase by 25%
10000 + 25% = Rs. 12500
Total cost = variable cost + fixed cost
(12500 * 120) + 400000 = Rs. 1900000
Cost p.u = 1900000 / 12500 = Rs. 152
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Cost p.u 160
75%is variable cost 120p.u
40rs p.u fixed cost (fixed cost not change when production unit increase or decrease) fixed cost is 40*10000=400000
Cal cost p.u if production increase by 25%
10000+25%=12500
Total cost = variable cost +fixed cost
12500*120+400000=1900000
Cost p.u =1900000/12500=152