kYZ. Ltd. Is currently working at 50oA capacity and produces 10,000 units. At 60%capacity raw material cost increased by 2% and selling price falls by 2 percent. At 80%capacity raw material cost increased by 5% and selling price falls by 5%.At 50% capacity the product costs Rs. 180 per unit and is sold at Rs. 200 per unit. TheUIIIL itcost UUSof U Rs. 1 80 comprises the followingP”.ti””1″tSgS gRs.Material 100Wages 30Factory overheads 30 (40% fixed)Admini strative Overheads 20 (50% fixed).).Prepare a marginal cost statement showing the estimated profit of the business when it isoperating at60Yo and 80% of capacity

Marginal Cost Statement:

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Let’s calculate the marginal cost at different capacities and then determine the estimated profit.

Given Data:

• Selling Price at 50% capacity = Rs. 200 per unit
• Cost per unit at 50% capacity = Rs. 180
• Material Cost at 50% capacity = Rs. 100
• Wages at 50% capacity = Rs. 30
• Factory Overheads at 50% capacity = Rs. 30 (40% fixed)
• Administrative Overheads at 50% capacity = Rs. 20 (50% fixed)

1. At 50% Capacity:

[ \text{Variable Cost per unit} = \text{Material Cost} + \text{Wages} + \text{Variable portion of Factory Overheads} + \text{Variable portion of Admin Overheads} ]

[ \text{Fixed Cost per unit} = \text{Fixed portion of Factory Overheads} + \text{Fixed portion of Admin Overheads} ]

[ \text{Total Cost per unit} = \text{Variable Cost per unit} + \text{Fixed Cost per unit} ]

[ \text{Contribution per unit} = \text{Selling Price} – \text{Total Cost per unit} ]

2. At 60% Capacity:

Increase in raw material cost by 2%, decrease in selling price by 2%.

[ \text{Variable Cost per unit (60%)} = \text{Material Cost (60%)} + \text{Wages} + \text{Variable portion of Factory Overheads} + \text{Variable portion of Admin Overheads} ]

[ \text{Fixed Cost per unit (60%)} = \text{Fixed portion of Factory Overheads} + \text{Fixed portion of Admin Overheads} ]

[ \text{Total Cost per unit (60%)} = \text{Variable Cost per unit (60%)} + \text{Fixed Cost per unit (60%)} ]

[ \text{Contribution per unit (60%)} = \text{Selling Price (60%)} – \text{Total Cost per unit (60%)} ]

3. At 80% Capacity:

Increase in raw material cost by 5%, decrease in selling price by 5%.

[ \text{Variable Cost per unit (80%)} = \text{Material Cost (80%)} + \text{Wages} + \text{Variable portion of Factory Overheads} + \text{Variable portion of Admin Overheads} ]

[ \text{Fixed Cost per unit (80%)} = \text{Fixed portion of Factory Overheads} + \text{Fixed portion of Admin Overheads} ]

[ \text{Total Cost per unit (80%)} = \text{Variable Cost per unit (80%)} + \text{Fixed Cost per unit (80%)} ]

[ \text{Contribution per unit (80%)} = \text{Selling Price (80%)} – \text{Total Cost per unit (80%)} ]

Now, calculate the estimated profit at 60% and 80% capacities using the contribution per unit figures. The profit is calculated as follows:

[ \text{Estimated Profit} = (\text{Contribution per unit} \times \text{Number of Units Produced}) – \text{Fixed Costs} ]

Ensure that all calculations are based on consistent units (e.g., lakhs or rupees).