Topic: Industrial Engineering
A manufacturer has the following data regarding a product. Fixed cost per month = Rs.80,000, Variable cost per unit = Rs.350, Selling price per unit = Rs.500, Production capacity = 1600 units per month. If the production is carried out at 75% of the rated capacity, then monthly profit is (in Rs.)
- A. 1 Lakh
- B. 1.2 Lakhs
- C. 1.4 Lakhs
- D. 0.8 Lakhs
Answer: A. 1 Lakh
Explanation: Actual units produced = $0.75 * 1600 = 1200$ units. Total revenue = $1200 * 500 = 6,00,000$ Rs. Total cost = Fixed Cost + (Variable Cost * Units) = $80,000 + (350 * 1200) = 80,000 + 4,20,000 = 5,00,000$ Rs. Monthly profit = Total Revenue - Total Cost = $6,00,000 - 5,00,000 = 1,00,000$ Rs (1 Lakh).