XYZ Ltd. Is currently working at 50% capacity and produces 10,000 units. At 60% capacity raw material cost increased by 2% and selling price falls by 2 percent. At 8% 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. The unit cost of Rs. 180 comprises the following.

 Prepare a marginal cost statement for XYZ Ltd. at 60% and 80% of capacity. We'll calculate the estimated profit for each scenario.

Given data:

• Current capacity: 50%
• Current production: 10,000 units
• Selling price at 50% capacity: Rs. 200 per unit
• Cost per unit at 50% capacity: Rs. 180 per unit

Cost breakdown at 50% capacity:

• Material: Rs. 100 per unit
• Wages: Rs. 30 per unit
• Factory overheads: Rs. 30 per unit (40% fixed)
• Administrative Overheads: Rs. 20 per unit (50% fixed)

Let's start by calculating the cost per unit at 60% and 80% capacity based on the given information:

At 60% capacity:

• Raw material cost increased by 2%: 100 * 1.02 = Rs. 102 per unit
• Selling price falls by 2%: 200 * 0.98 = Rs. 196 per unit

At 80% capacity:

• Raw material cost increased by 5%: 100 * 1.05 = Rs. 105 per unit
• Selling price falls by 5%: 200 * 0.95 = Rs. 190 per unit

Now, let's calculate the cost per unit at 60% and 80% capacity:

Cost per unit at 60% capacity: Material: Rs. 102 Wages: Rs. 30 Factory overheads (40% fixed): 40% * 30 = Rs. 12 Administrative Overheads (50% fixed): 50% * 20 = Rs. 10

Total cost per unit at 60% capacity = 102 + 30 + 12 + 10 = Rs. 154 per unit

Cost per unit at 80% capacity: Material: Rs. 105 Wages: Rs. 30 Factory overheads (40% fixed): 40% * 30 = Rs. 12 Administrative Overheads (50% fixed): 50% * 20 = Rs. 10

Total cost per unit at 80% capacity = 105 + 30 + 12 + 10 = Rs. 157 per unit

Now, let's calculate the estimated profit at 60% and 80% capacity:

At 60% capacity: Selling price: Rs. 196 per unit Cost per unit: Rs. 154 per unit

Estimated profit per unit = Selling price - Cost per unit Estimated profit per unit = 196 - 154 = Rs. 42

Estimated total profit at 60% capacity = Estimated profit per unit * Production Estimated total profit at 60% capacity = 42 * 10,000 = Rs. 420,000

At 80% capacity: Selling price: Rs. 190 per unit Cost per unit: Rs. 157 per unit

Estimated profit per unit = Selling price - Cost per unit Estimated profit per unit = 190 - 157 = Rs. 33

Estimated total profit at 80% capacity = Estimated profit per unit * Production Estimated total profit at 80% capacity = 33 * 10,000 = Rs. 330,000

So, the estimated profit for XYZ Ltd. when operating at 60% capacity is Rs. 420,000, and when operating at 80% capacity, it is Rs. 330,000.

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