Given the production cost associated with an item is Rs. 20 and fixed cost is Rs. 60,000 per month Each item is sold at Rs. 32 per item. If the target profit is Rs. 18,000, then number of item to be produced and sold is as
Answers
Given : the production cost associated with an item is Rs. 20 and fixed cost is Rs. 60,000 per month
Each item is sold at Rs. 32 per item.
the target profit is Rs. 18,000,
To Find : Number of item to be produced and sold
Solution:
Let say Number of item to be produced and sold in a Month = M
the production cost associated with an item is Rs. 20
=> Variable cost = 20M Rs
fixed cost is Rs. 60,000 per month
Total Cost = 20M + 60000 Rs
Each item is sold at Rs. 32 per item.
=> Total Selling Price = 32M Rs
Profit = Total Selling Price - Total Cost
=> Profit = 32M - (20M + 60000) Rs
Profit = 18000 Rs
Equate both
=> 32M - (20M + 60000) = 18000
=> 12M = 78000
=> M = 6500
Number of item to be produced and sold in a month = 6500
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