Question

A company produces 10,000 units of a product. The fixed cost is ₹2,00,000, variable cost per unit is ₹40, and the selling price is ₹70 per unit. If an export order for 2,000 units at ₹55 per unit is received, what will be the impact on total profit, assuming no capacity constraint?

Q: Answer-A company produces 10,000 units of a product. The fixed cost is ₹2,00,000, variable cost per unit is...

For the export order, only variable costs are relevant as fixed costs are already covered. Contribution per unit from order Selling Price - Variable Cost 55 - 40 15. Total contribution from 2000 units 2000 15 30,000. Since this is additional contribution, profit increases by 30,000.