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(i) A firm manufactures a product whose selling price is Rs.10. It has a capacity of 10.000 units. The variables costs are Rs.2.50 per unit. The fixed costs are estimated at Rs.30,000 up to 50% capacity utilization, Rs.36,000 above 50% level, and Rs.42,000 if the utilization is 80% or above.

  1. What will be the operating profit of the fir at 70%, 80% and 90% utilization.
  2. What is the lowest level of activity at which the firm can make a profit of Rs.18,000?

(ii) What is detailed work factor system of PMT? List the common areas of its application.        

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