What will be monthly profit if additional work shift added

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A manufacturing company has the following monthly budget.

Sales 480,000

Direct Material 140,000

Direct Labour 110,000

Variable overheads 50,000

Fixed overheads 130,000

Total Cost 430,000

Profit 50,000

Sales can be increased by 15% per month if an extra work shift is added, but the sales price would have to be reduced by 3% on all units sold in order to sell the extra volume. Direct labour is a variable cost, but work in the extra shift would have to be paid an extra 50% per hour on top of the normal hourly rate. Increased purchases of materials means that a bulk purchase discount of 2% will be available on all materials purchased. Additional fixed overheads would be $2,000 per month.

Problem 1: If the additional work shift is added, what will be the monthly profit?

A $51,400

B $52,150

C $53,410

D $60,060

Reference no: EM132998363

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