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Question - A company manufactures a product which it sells to other firms, who process it further and sell it to industrial users. The normal monthly production of the company is 1,00,000 units. The unit selling price is Rs.60 per unit and standard variable costs per unit is Rs.39 per unit and fixed costs per month are Rs.6,00,000.
The management of the company is considering a proposal to process the product further so that it can sell the finished product directly to the industrial users at Rs.80 per unit. Further processing requires a variable cost of Rs.13 per unit and fixed costs of Rs.3,00,000 per month.
Identify the incremental profit earned by the company after the further processing.
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