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A manufacturer has the following data regarding a product: Fixed cost per month = Rs. 50000 Variable cost per unit = Rs. 200 Selling price Per unit = Rs. 300 Production capacity = 1500 units per month If the production is carried out at 80% of the rated capacity, then the monthly profit (in Rs.) is________ :

Question

A manufacturer has the following data regarding a product: Fixed cost per month = Rs. 50000 Variable cost per unit = Rs. 200 Selling price Per unit = Rs. 300 Production capacity = 1500 units per month If the production is carried out at 80% of the rated capacity, then the monthly profit (in Rs.) is________ :

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Solution

To calculate the monthly profit, we need to follow these steps:

  1. Calculate the total fixed cost: This is given as Rs. 50000.

  2. Calculate the total variable cost: This is the variable cost per unit (Rs. 200) multiplied by the number of units produced. The number of units produced is 80% of the production capacity (1500 units), which is 0.8 * 1500 = 1200 units. So, the total variable cost is Rs. 200 * 1200 = Rs. 240000.

  3. Calculate the total cost: This is the sum of the fixed cost and the variable cost, which is Rs. 50000 + Rs. 240000 = Rs. 290000.

  4. Calculate the total revenue: This is the selling price per unit (Rs. 300) multiplied by the number of units sold. Since all produced units are assumed to be sold, the total revenue is Rs. 300 * 1200 = Rs. 360000.

  5. Finally, calculate the profit: This is the total revenue minus the total cost, which is Rs. 360000 - Rs. 290000 = Rs. 70000.

So, the monthly profit is Rs. 70000.

This problem has been solved

Similar Questions

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. Given the following data for a perfectly competitive firm, what is the amount of profit the firm will make atthe profit maximizing output? AR = $100 and TC = 1,000 + 125Q - .5Q2 where Q = units produced permonthA) none – the firm would shut downB) $1,312.50C) $2,548.63D) –$1,425.86E) –$2,351.27

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