Solution-What level of production will have to be reached

What level of production will have to be reached

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Reference no: EM132829267

Question - Per tyre structure of a cycle made by the cycle company is as follows.

Material- 60

Labour- 20

Variable overheads- 20

100

Fixed overheads 50

Profit 50

Selling price 200

This is based on production of one lakh tyre per annum. The company expects that due to competition, they will have to reduce selling price, but they want to keep the profit intact. What level of production will have to be reached to get the same amount of profits, if:

a. The selling price is reduced by 10%.

b. The selling price is reduced by 20%.

Reference no: EM132829267

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What level of production will have to be reached

Reference no: EM132829267

Reference no: EM132829267

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